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better procedures for repairs are quite strong. Equally important is the necessity to reduce the personal inconvenience associated with automotive service and repair as much as possible. Customers' expectations have never been higher, and the General Motors programs as outlined are indicative of our commitment to those expectations.
And now the following comments are provided on other matters that were discussed at prior hearings. Allegations have been made as to the waste of some 20 billion consumer dollars resulting from unnecessary and fraudulent auto repair practices. We urge that this subcommittee seek documentation on those charges. Perhaps the claims and costs could be broken out in categories by type of repair facility involved-whether they were franchised dealers, or imports, gas stations, independents, or mass merchandisers whatever, we might better understand their significance. Without careful examination, claims such as these could lead to ill-advised government mandates in the future. Clearly, this would not be in the best interest of the consumer or the industry.
Previous testimony has suggested that ratings for maintainability, as provided under title II of the Motor Vehicles Information and Cost Savings Act will directly address the problem of unnecessarily difficult and expensive auto repairs. A substantial effort already has been made to determine a similar, predictive rating for damageability characteristics of new vehicles.
In view of the extensive effort already made on predictive vehicle ratings, we believe it is incumbent upon the DOT to determine, before large additional sums of public funds are expended, that a maintainability rating will in fact be useful to the consumer.
Regarding mechanics' qualifications, we believe that voluntary testing and certification should be used to determine the competence level of auto mechanics.
We recommend continued support of the National Institute of Automotive Service Excellence's voluntary certification programs as an alternative to mandatory testing and licensing.
That completes my oral report, Mr. Chairman. [Mr. Pansa's prepared statement follows:)
STATEMENT OF O. ROBERT PANSA, DIRECTOR, SERVICE SECTION, CONSUMER
RELATIONS AND STAFF, GENERAL MOTORS CORP. General Motors appreciates this opportunity to comment on the general subject of auto repair. Our comments are intended to provide assistance to this Subcommittee in its evaluation of the auto repair industry.
INTRODUCTION There is no doubt that by providing car owners with prompt repair and service, correctly done the first time and at a reasonable cost, manufacturers and dealers alike build the kind of reputation that is needed to retain customer loyalty and bring in new business. On this basic premise, General Motors has been moving aggressively with a number of programs for which the final objective is to ensure that our customers are fully satisfied in owning and operating a GM car.
The GM Consumer Relations and Service Staff is responsible for the coordinating of all divisional activities, to reduce the service requirements of our vehicles, to make them easier and less costly to service and repair when necessary and to establish equitable procedures for resolving owner complaints should they occur for any reason. This is a large order, but one that has complete support at the highest level of GM's management.
While we are keenly concerned when any of our customers may be dissatisfied with the promptness, thoroughness or cost of automobile maintenance and repair, whatever the reason, we are also very proud of the enormous satisfaction provided by our products. Each and every day millions of our owners get into their cars, start them up and drive away without any concern as to whether the vehicle will perform properly. Having said that, we want to make clear any difficulties with maintenance and repair are of concern to us even though the factors that cause them are frequently beyond the ability of a manufacturer to control. There are some 130 million U.S. cars and trucks now in operation, and the task of keeping them properly serviced and repaired is an extremely complex job. In reviewing the issues of concern to this Subcommittee, we submit that we should not lose sight of the overall satisfaction that the automotive manufacturing, service and repair industries now provide on a daily basis to the overwhelming majority of vehicle owners.
The balance of our statement will address the following issues indicated in the letter inviting General Motors to participate in these hearings: Warranty; complaint arbitration; auto design and repair; service and repair information; and diagnostics.
WARRANTY We are told that one of the major complaints heard by this Subcommittee is unsatisfactory warranty service. This is one of the most sensitive and critical areas in the automotive business. One of the underlying causes is the inconvenience the customer experiences by the fact that he has to return a new car to the dealership for unscheduled service or repair. Because the automobile has developed into an incredibly reliable product, occasional failures can trigger customer reactions ranging from frustration to anger. These reactions are compounded whenever the customer is not treated properly in the course of obtaining service or has to change his personal schedule in order to have his vehicle repaired. While our job is to reduce the frequency of such occurrences, again we must keep in perspective that in the great majority of cases, a customer receives excellent treatment and service from our dealer organization.
LABOR RATES Of the many achievements in the area of warranty service, one of the most significant, in our opinion, is our new Dealer Warranty Labor Rate Compensation Program. The dealer will now be able to choose between two reimbursement plans, whichever best suits his needs.
Under one option, the dealer is reimbursed at the hourly labor rate normally charged to retail customers. To qualify for this rate, the dealer must prominently post that rate in the service reception area and note the rate on the repair order. Clearly, any GM dealer can have a warranty labor rate equal to his retail rate.
Under the second option, the warranty labor rate is determined by a specific formula, more liberal than the one previously in effect. Using this formula, the labor rate is figured on the basis of 240 percent of the average technicians' base hourly labor rate plus 100 percent of legislated and voluntary fringe benefits, such as workers' compensation, social security and unemployment compensation. However, the actual hourly labor rate calculated in this manner may not exceed the stated labor rate for retail customers.
This new program is a substantial improvement in General Motors warranty reimbursement procedures and is an important part of our continuing effort to improve customer service and ensure customer satisfaction. Since the effective date of the new program, approximately 60% of the GM dealers completed requests for new hourly warranty labor rates, split about equally between the two options.
EXPANDED WARRANTY COVERAGE In addition to the new dealer warranty labor rate options, we expanded and simplified our new vehicle warranty effective with the introduction of 1978 model GM passenger cars and light trucks. Under the new warranty, the entire car or truck, except for tires, is covered for 12 months or 12,000 miles, whichever comes first. The expanded coverage applies to such common services as adjustment of fan belts, engine idle speed and alignment of windows and hoods, which previously were covered for only the first 90 days. In short, General Motors will repair any defect during the warranty period, without charge to the customer, except for damage due to accidents or misuse.
MEDIATION OF CUSTOMER COMPLAINTS The Subcommittee has expressed an interest in our experimental arbitration program now underway in Minnesota. We have undertaken this program in the realization that despite all efforts to provide satisfactory service, there will be occasions when sincere differences of opinion arise between the customer, the dealer and/or General Motors on matters of quality or cost. Arbitration may prove to be a means of resolving these differences while demonstrating to the customer our sincerity in maintaining a high degree of customer satisfaction.
To measure the effectiveness of arbitration, a GM program was established with the cooperation of the Council of Better Business Bureaus and the Better Business Bureau of Minnesota. The program, now in a test phase, is designed to handle unresolved complaints arising in the seven counties comprising the Minneapolis/St. Paul Metropolitan area.
General Motors has committed itself to binding arbitration with respect to any issue involving the interpretation or coverage of the new vehicle warranty, or any product complaint up to 36 months or 36,000 miles after the car has first been placed into service. Awards will be limited to the actual value of the product or service in question and will not include any punitive damages.
We recognize that in some cases, the complaint might involve a sales or service transaction exclusively between the dealer and his customer. Thus, GM has no direct product or warranty responsibility nor authority to dictate specific action on the part of the dealer. In such cases, the dealer will be offered the opportunity for arbitration on a case by case basis.
The Better Business Bureau will exhaust all of its normal efforts at mediation in an effort to resolve the matter between the parties prior to any arbitration. Only when these efforts fail will arbitration be suggested.
To help create public awareness of this program it was announced at a news conference held in Minneapolis with newspaper, radio and television coverage. To further increase awareness of the program, GM dealer zone representatives have been instructed to advise a customer of his option to arbitrate if it becomes evident that a satisfactory resolution of his complaint cannot otherwise be obtained.
Since the program began June 15, there have been 192 GM customers who contacted the Better Business Bureau. Of these 129 had formal complaints. Fifteen of the complaints involved the full arbitration process, 78 were resolved by direct mediation with the customer and there are currently 36 outstanding complaints which we expect to resolve shortly.
AUTO DESIGN AND REPAIR
In previous testimony before this subcommittee there have been allegations that economic losses are a result of automotive designs that place priority on ease of manufacture over ease of maintenance, repair or diagnosis. While this may appear to be the case, a more careful examination generally will show that, in most cases, designs that favor ease of assembly also favor serviceability. For instance, electrical system connectors designed for ease of assembly, lock together for reliability and provide for one-handed disconnect for ease of service.
The major thrust of our efforts to reduce automotive maintenance and repair cost is to engineer improved reliability and durability into the car when it is being designed. Tires, brakes, engines, transmissions and, in fact, virtually all components of today's cars last substantially longer than those of the past. As late as the 1950's, it was not uncommon to grind engine valves as early as 25,000 miles and replace piston rings at 50,000 miles. Today, engines seldom need either of these services performed during their entire usable life. The advent of electronic ignition has eliminated distributor points and condensers.
Previously, these items had to be replaced several times during the normal life of the vehicle. The high energy ignition system, along with use of unleaded fuels has substantially increased spark plug life, as they now last up to 22,500 miles or more. In short, there is minimum need for engine tune-ups compared to the past. This, and similar accomplishments in the customer's favor are usually ignored by those alleging that our priorities are misplaced.
PRODUCT TESTING To help assure high levels of reliability requires extensive product testing to evaluate the elements of an automobile's performance before it is marketed. General Motors product test programs are conducted at its many Proving Ground facilities, the largest of which are located in Milford, Michigan, and Mesa, Arizona. These corporate facilities, totaling 8,600 acres and employing over 2,800 people, are in addition to the work performed by individual GM divisions and at independent component testing laboratories throughout the country. We would like to extend an open invitation to members of this Subcommittee--or your staff-to visit our facilities and observe first hand the efforts of General Motors engineers to build a reliable and durable product.
While efforts to design durability and reduced maintenance into our products is given top priority, realistically we must acknowledge the importance of proper owner maintenance. Here, variations range from the owner who performs almost no preventive maintenance, to the owner who follows strictly the manufacturer's recommendations. Many even supplement those with more frequent service.
The recommended maintenance schedule for General Motors vehicles is carefully developed from the extensive testing that is performed on individual vehicles and the comprehensive service history of vehicles in use. This schedule is organized into a format that will minimize the number and frequency of maintenance intervals and still be consistent with the needs of the average vehicle under different operating conditions.
Over the years, we have continued to reduce the number of recommended scheduled maintenance items of GM cars and trucks. For example, over a 50,000 mile or five year period a typical 1956 Chevrolet required 47 trips to a service facility in order to satisfy the recommended maintenance schedule. Over the same span of time, we recommend only seven trips for a 1978 Chevrolet. This is quite an accomplishment considering the greatly increased complexity of today's vehicle.
Certain maintenance requirements are related to mileage accummulation while others are influenced merely by the passage of time. This is the basis for some service needs at specified mileage intervals, say 30,000 miles, and others on a time basis such as "every 12 months.” Thus, the high mileage driver may experience a lower maintenance cost per mile than a low mileage driver. The variation of mileage versus time can cause as much as a 20 percent difference in maintenance cost over a five year or 50,000 mile period. Clearly, there in no simple answer to the question “What does it cost to maintain an automobile?" Nevertheless, efforts to reduce the costs of maintenance and service are of continuing importance.
VEHICLE SERVICEABILITY Serviceability starts with the design of the vehicle. It embraces the concept of reduced service cost over the useful life of the car whether the service is performed by one of our dealers or an independent service facility.
The design of a new General Motors vehicle begins at what we call “Project Centers." Today's engineers are faced with the task of designing a vehicle that will meet the expectations of consumers for style, quality and cost. At the same time, the engineer must deal with overlapping and often conflicting regulations for safety, emission control and fuel economy. By bringing corporate experts, including service personnel, together into a single project center, we are better able to achieve the necessary design coordination.
The project center concept allows service personnel to influence the design from the earliest stages. This has resulted in a number of serviceability improvements. For example, gauges and radios can now be serviced directly from the passenger compartment. The tip-out glove box design provides for ease of access to circuits, components and controls that are contained under the passenger side of the instrument panel. We are particularly proud of our development of a new integral wheel bearing used on some of our 1979 cars. This bearing is preadjusted, prelubricated and sealed, creating a maintenance-free long life wheel support package.
COLLISION REPAIR COSTS Previous testimony alluded to the rising cost of collision repair and alleged that manufacturers were reluctant to help reduce these costs and provide mechanic training for the independent collision repair industry. To the contrary, General Motors has a number of programs to disseminate information and to provide training for GM and independent collision repair industry personnel. We believe these programs play a significant role in holding down collision repair costs. For example, one of the best ways to control collision repair costs is to have each claim handled by a well trained adjuster. Motors Insurance Corporation, the GM insurance subsidiary, maintains an Adjuster Training Program to teach MIC adjusters, and others who enroll, basic auto construction and component functions, as well as repair techniques and limitations.
In addition, MIC conducts automotive repair clinics for its branch personnel, dealer body shop personnel, vocational schools and various automotive repair associations. As but one example, clinics on radiator and air conditioning condenser repair have been conducted for members of the National Automotive Radiator Service Association (NARSA).
With respect to published materials, MIC's Educational Training Material Brochure describes current educational material available to help promote safe and economical automobile repair. The brochure and all educational material are available to the repair and insurance industries, vocational schools and the general public.
In addition, General Motors makes available its General Service Information Bulletins to both dealers and independent repair facilities. This program was intensified in 1971 to provide improve and simplified techniques for making body and mechanical repairs.
The Bulletins are printed and distributed to the repair industry, including independent service associations, insurance companies, oil companies, vocational schools and trade journals. Recent topics of these bulletins include: “Repairs to Hood Panels,” “Plastic Repair and Refinishing,” “Repairing Collision Damage Through the Pulling Technique," and "The High Energy Ignition System.” This informational program is intended to assure that independent repair facilities, as well as franchised dealers, have easy access to the latest maintenance and repair methods known to General Motors.
To further assure that we do not become isolated from the realities and needs of the service industry, direct liaison is maintained with service equipment manufacturers, major trade associations and the Automotive Service Trade Press. For example, thus far in 1978, more than 30 meetings have been held with various independent automotive service groups such as the Automotive Service Industry Association, Automotive Service Council, Equipment and Tool Institute, American Trucking Association and others.
In support of this effort, in 1970 General Motors established a corporate committee to serve as a communications link between the independent service and repair industry and GM's engineering community.
The scope of this committee includes:
Function as the GM communication channel for product or technical-related subjects for the insurance industry (collision repair, product design, theft, etc.).
The membership of this Committee consists of staff engineering and service personnel from our various divisions and staffs.
These contacts with industry groups and trade associations provide the opportunity for dialogue with the automotive service industry and easy access to General Motors for technical information.
We also participate in such major service industry programs as “Partners in Progress” and “Equipment Investment Planning Guide." In the "Partners in Progress" program, GM service personnel work with the Equipment and Tool Institute to develop and present technical seminars at national conventions of the repair shop associations. Further, we provide training to the individual service equipment manufacturers so they may in turn present such seminars at local and state level meetings.
The “Equipment Investment and Planning Guide” program allows GM service personnel, working in conjuction with the Equipment and Tool Institute to aid in solving the economic problems of the repair industry. Increased inflationary pressures have caused a tremendous increase in labor and overhead costs. The obvious result is increased cost to the consumer and eroded profit margins. This program is designed to give direction on how to properly invest in service equipment which can increase productivity and offset increased costs.
DIAGNOSTICS Turning now to the matter of diagnostics, there is no question that the increased complexity of vehicle components and the level of electronic sophistication has generated advances in the state-of-the-art of diagnostics. Examples of diagnostic systems currently available on some or all General Motors cars and trucks are: Engine electrical diagnostic connector; ball joint wear indicator; freedom battery test indicator; and disc brake wear sensors.
Look to the future we are evaluating self-inflicting features so owners will know when a need for service exists. A typical example of future onboard diagnostic being considered is the air conditioning system charge and moisture indicator. Others include indicators for transmission temperature and low engine oil level.
It has been suggested to this Subcommittee that the increased complexity and electronic sophistication of cars will necessitate the use of specialized diagnostic equipment for service or repair.
While computers can be used to monitor and control various systems and provide diagnostic information to the mechanic, we believe the need for costly specialized test equipment in repair shops should be kept to a minimum. This can be achieved