Quality chief leaves FCA amid recalls, poor reliability
Fiat Chrysler Automobiles NV's chief quality officer is leaving the company amid worsening reliability ratings and a potential recall investigation into millions of cars and trucks.
The automaker on Tuesday announced that senior vice president of quality Doug Betts has "left the company to pursue other interests." Betts, an industry veteran and Chrysler quality chief since 2009, has been replaced by two people: Mark Chernoby, who will head quality for FCA, and Matthew Liddane, who will lead quality in North America for Chrysler Group.
The executive shakeup came a day after all but one of Chrysler's U.S. brands ranked at the very bottom of Consumer Reports' annual reliability study and the National Highway Traffic Safety Administration agreed to review a request to open a formal investigation into 4.9 million 2007-14 Chrysler vehicles. Those vehicles are tied to electronic failures linked to stalling, air bag non-deployments, unintended acceleration and fires.
A company spokesman said "no comment" when asked if Betts' departure was related to the potential recall investigation and poor reliability rankings.
Chrysler historically has performed poorly in Consumer Reports' reliability ratings, but this year could have been the straw that broke the camel's back. The Auburn Hills unit of FCA performed the worst of any automaker in the annual rankings, with Dodge, Ram, Jeep and Fiat at the bottom of this year's list of 28 brands. The company's namesake Chrysler brand ranked 22nd, down four places from a year ago.
Some of Chrysler's brands — especially Jeep and Ram Truck — have been flying out of dealerships. Michelle Krebs, AutoTrader.com senior analyst, said Chrysler's low reliability ratings could derail that success: "They are doing really well in sales, but if consumers have a bad experience in terms of reliability, will they have repeat customers?"
Betts, a member of FCA's Group Executive Council, leaves the automaker two months after Chrysler said it was reorganizing vehicle safety efforts into a new office of Vehicle Safety and Regulatory Compliance led by Senior Vice President Scott Kunselman. Previously, Chrysler housed auto safety in its global engineering group.
Chrysler's top safety engineer previously reported to Chernoby, who was then senior vice president of engineering. Chernoby will continue responsibilities as chief operating officer for product development and remain a member of the FCA Group Executive Council, an influential decision-making group led by CEO Sergio Marchionne.
Liddane has held a series of engineering positions with increasing responsibility. He most recently was Chrysler vice president of systems and components.
Automakers under fire
In May, Marchionne revealed he had hired an outside team to review its safety practices as the U.S. auto industry braced for soaring costs from the rising number of recalled vehicles. Marchionne said he asked consultants "to look at the Chrysler process itself, to find out whether we can improve it — we're going to benchmark it against other (automakers)."
Chrysler's reorganization was the second this year for a Detroit automaker. Faced with massive recalls and federal investigations, General Motors Co. CEO Mary Barra in March named Jeff Boyer to the new position of vice president of global vehicle safety. Two months later, GM announced a restructuring of its global vehicle engineering unit, including hiring 35 product safety investigators as part of a response to safety issues.
Automakers have recalled a record 53 million-plus vehicles in the U.S. this year, topping the prior record of 30.8 million in 2004.
Management consultant Ken Dalto said the auto industry is under a microscope because of quality issues, and someone always has to be held accountable.
"There's no way they can go through a combination of ratings and recalls without someone being responsible," he said, adding having two executives replace Betts is a good start. "That's the culture of the auto industry."
Dalto of Bingham Farms-based Kenneth Dalto & Associates said Chrysler is going to have to "dig deep, internally." He said automaker must not just shift management, but follow GM's lead and attempt to create a cultural shift.
Since becoming CEO in January, Barra has been laboring to change the 106-year-old automaker's culture that has been criticized for decades as insular, slow to take responsibility for problems, hesitant to deliver bad news to superiors and reluctant to fire poorly performing executives.
GM this year has recalled more than 26.5 million vehicles in the U.S., including 2.6 million older cars for ignition switch defects linked to 30 deaths. Chrysler recalled nearly 4.7 million vehicles domestically through mid-October, including many older-model cars and trucks.
3rd-quarter results today
Jake Fisher, director of automotive testing at Consumer Reports, said Chrysler is combating problems with its UConnect infotainment system and powertrain technologies. He said the sharing of engines, transmissions and other technologies between Chrysler and Fiat has not eased reliability concerns in recent years.
All of Chrysler's brands declined in rankings in the Consumer Reports survey compared to a year ago. And the Fiat 500L was named the least reliable among 265 models included in the survey. Chrysler's year-over-year sales have increased 54 consecutive months, including seven months of double-digit growth this year.
Chrysler, in a statement Monday on its reliability rankings, said it values customer feedback and uses it to improve its vehicles: "Many of the issues identified in the survey coincided with new product and technology introductions and have already been addressed with vehicles currently in production," the company said.
The executive changes on Tuesday were announced a day before the automaker is scheduled to release its third-quarter financial results, the company's first earnings since Italian automaker Fiat SpA and Chrysler officially merged into FCA.