Crisis Management

GM’s Branding Disaster

11 Mar , 2014  

General Motors is in the headlines today. Both the New York Times and the Wall Street Journal are reporting that a House committee is investigating how the company responded to issues with faulty ignition switches.

The story is astonishing.

Apparently in 2004 GM learned that several of its car models had a faulty ignition switch that sometimes turned off the vehicle for no reason, making it hard to control and disabling the air bags. The company considering making repairs but didn’t. At some point GM learned that the switch may have played a role in several fatal crashes. The company again considered fixing the problem but didn’t. More people died.

Now, a decade later, GM is getting ready to make the repairs. Only the company can’t actually make the repairs because it doesn’t have the parts or the capacity to implement a broad recall quickly.

What?

You should read that summary of events again.

GM knew it had a problem but somehow the company, on more than one occasion, decided not to fix it.

This is deeply concerning. It raises fundamental questions about GM’s company culture, willingness to make trade-offs and concern for safely and quality. This is a terrible development for the GM brand.

It could have a significant impact on the company. When there are many good car brands in the world, why buy from one that makes this sort of decision?

CEO Mary Barra understands the magnitude of the problem and the risk to the brand. She is taking personal ownership of the situation, making it a top company priority and bringing in outside assistance to understand precisely how this happened. I suspect she is incredibly frustrated and embarrassed.

Unfortunately, a committed CEO can only do so much in a huge company. The GM brand is in trouble.


2 Responses

  1. Ken Templin says:

    Saying the GM brand is in trouble regarding this issue is a bit sensationalistic. Most of the vehicle manufacturers have at one time or another not been timely with their recall or repair notices. Nevertheless, the GM brand continues to be in trouble because their quality has not and is not what it should be. GM does not have a strong quality culture that would limit the impact of these issues on their brand.

    • Tim Calkins says:

      Ken—As the story unfolds I think it only is getting worse for GM. And there is no sign the story will fade away anytime soon. I wonder if they will need to scrap the brand entirely and replace it with a new name that signals a fresh start.

      I completely agree that getting the quality up is essential.

      Tim

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