General Motors Co. is increasing its response to safety issues, recalling more vehicles and vowing to do better. The coverage focused on various aspects of the crisis, but the long-term impact on the company could be the bigger issue.
Here are some of the details from the Wall Street Journal story by Jeff Bennett:
General Motors Co. Chief Executive Mary Barra stepped up her response to the company’s vehicle-defect problem, announcing three new safety recalls and vowing to change the way the auto maker handles recalls.
In a video posted on a GM website, Ms. Barra sounded a personal note as she tried to reassure customers, regulators, lawmakers and investors that the company is confronting not just the threats from defective vehicles but the corporate processes that failed to respond to them sooner.
GM last month recalled 1.6 million vehicles world-wide to fix faulty ignition switches that have been linked to a dozen deaths. It took the company nearly a decade to order the recalls after employees identified the problems ahead of the launch of the 2005 Chevrolet Cobalt compact car.
—
GM recalled some 1.7 million vans, sport-utility vehicles and Cadillac luxury cars to fix a variety of problems, chief among them a wiring defect that could result in seat air bags failing to deploy.
In all, GM has recalled 3.3 million vehicles world-wide since mid-February, with the majority of those sold in the U.S.
The top of the New York Times story by Bill Vlasic and Christopher Jensen focused on the comments by CEO Mary T. Barra and her plans for changing the way GM handles recalls:
Ms. Barra also made her most forceful comments yet on G.M.’s need to reform its safety efforts.
“Something went very wrong in our processes in this instance, and terrible things happened,” she said in an internal video broadcast to employees.
G.M. has come under intense pressure from government officials to explain why it took years to address faulty ignition switches that could cut off engine power and disable air bags in Cobalts and other small cars.
Ms. Barra’s comments to employees — including a letter on March 4 — represent the latest effort by the company to limit the damage that the recalls have inflicted on its reputation and consumer confidence.
“Mary Barra understands the value of taking full responsibility for G.M.’s latest, high-profile challenges, especially if she wants to send the message that this is a new G.M.,” said Karl Brauer, an analyst with the auto-research firm Kelley Blue Book.
Forbes contributor Micheline Maynard compared the issue to Toyota’s troubles in 2009:
GM’s predicament is the same kind of uproar that surround Toyota five years ago. In 2009 and 2010, the Japanese’ carmaker’s sterling reputation was battered by millions of recalls involving sudden acceleration in a variety of its vehicles. Like GM, Toyota was in the spotlight for months, as investigators and trial lawyers delved into its production methods and corporate culture. While the crisis ended after about half a year, Toyota is still mopping up the damage.
The 2009-10 experience was a historic turning point for Toyota, coming not long after it passed GM to become the world’s biggest carmaker. Used to maneuvering with an aura of opaqueness, Toyota had little preparation for the kind of scrutiny that came its way.
It was especially trying for Toyoda’s new chief executive, Akio Toyoda, the grandson of the carmaker’s founder. Toyota initially resisted efforts to have Toyoda testify before Congress, saying that the matter could be handled by its North American operations. But as it emerged that the decision making process for handling the recalls rested in Japan, Toyoda flew to Washington in February 2010 to appear before the House Committee On Oversight and Government Reform, one of three panels that opened investigations in the Toyota recalls.
Ben Klayman reported for Reuters that GM was working with suppliers to fix the costly problem:
The Detroit automaker said on Monday it would take a $300 million charge in the first quarter, primarily to cover the costs related to the ignition-switch recall and the three new recalls.
Barra previously apologized for GM’s failure to catch the faulty ignition switches sooner. In Monday’s video, she said GM is “conducting an intense review of our internal processes and will have more developments to announce as we move forward.”
The decade-long process that led to last month’s ignition-switch recall of such older GM models as the 2005-2007 Chevrolet Cobalt and 2003-2007 Saturn Ion has led to government criminal and civil investigations, congressional hearings and class-action lawsuits in the United States and Canada. All ask why GM took so long to address a problem it has said first came to its attention in 2001.
Barra said on Monday that the company was working with the supplier of the ignition switches, Delphi Automotive, to add a second production line for replacement parts and that customers would receive a detailed notice by mail during the second week of April.
While GM works to contain the problem, shareholder didn’t seem to mind the latest news. The stock was up slightly on Monday. The true test will be if consumers shun the automaker, which will be told in quarterly results.
