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Nissan Quality Slips Under Ghosn
By Mike Cervantes
May 29, 2004, 22:17

Photo Courtesy: Nissan North America

Perhaps the recent JD Power & Associates’ “Initial Quality Survey” can shed some light on a recent announcement that Nissan CEO Carlos Ghosn will shift (no pun intended) to the company’s North American arm. In the IQS, Nissan dropped from 6^th place to 11^th, with 147 problems per 100 vehicles, well below the average 119 problems per 100 vehicles.

The timing couldn’t be worse, as the media spotlight continues to shine on the company as it wraps up its stunning turnaround from near bankruptcy and launches perhaps its most ambitious growth plan yet. With models like Nissan’s first full-size truck and SUV, the Titan and Armada respectively, now on sale, Nissan cannot afford to risk offending new owners with shoddy quality.

Yet, according to a recent Business Week article, Nissan appears to be doing just that. BW reports that products coming out of Nissan’s new Canton, Mississippi plant (the Titan, Armada, Quest minivan, and Infiniti QX56 full-size luxo-SUV) appear to be weighing down on the brand’s overall quality.

BW reports that “poor craftsmanship” is the main complaint about products coming out of Canton. This could range from squeaks and rattles, to misaligned panels and even pieces breaking off. However, BW also mentions that the Quest has been recalled for “a sliding door that opened when drivers accelerated rapidly.”

Analysts contend that it is Nissan’s very turnaround that is responsible for the drop in quality. Ghosn & Co. have literally stuffed the pipeline with products before, they contend, Nissan could get the engineering resources in place to handle such a glut of new models. The Canton plant, in particular, was tasked with the production of 4 all-new models within months of coming online.

But perhaps the single most damaging move was Ghosn’s cost cutting policies. Some argue that he has leaned too hard on suppliers to cut costs. This has had an impact not only on plush interior materials (or lack thereof), but on key internal parts as well. In perhaps the most revealing passage, the Business Week article notes, “One consultant, who took apart a Titan to study it for a rival, says that certain internal parts aren't made to fit together as precisely as at Toyota and others. That forced assembly line workers at Canton to find ways of fitting the pieces snugly together -- hardly ideal since many of them had never worked at a car plant before.”

A company spokesperson claims that Nissan will address all of the issues being raised, but the issue of quality goes all the way up the chain of command to Ghosn himself. If he is satisfied with the materials used in some of his models (and the redesigned 05 Altima is a sign he may not be), then don’t expect Nissan’s performance in JD Power surveys to improve anytime soon.

The problem is, while cost cutting may save money in the short term, it may be damaging in the longer term. Some analysts believe Nissan’s warranty coverage costs could spike if they’re forced to replace defective parts. Not to mention the damage to the company’s brand image, something that cannot be fixed as easily as spending a few more dollars on quality parts and materials.