Rare Public Apology Likely Won’t Keep Major Recall from Denting GM’s “New” Brand

FacebookTwitterLinkedIn

The controversy over its big recall of old cars is not good for “The New” General Motors.

On the heels of the launch of a new advertising campaign for its biggest brand, Chevrolet, that touts its vehicles as vanguards of “The New” in several ways, the largest US-based automaker unfortunately is suffering from a huge dose of “The Old” GM.

Not only has it recalled more than 1.6 million vehicles from mid-last decade to fix the cars’ ignition switches, but accidents stemming from the defect have led to at least 13 front-seat fatalities in the United States—by the automaker’s admission. Now the company is being investigated by the US traffic safety agency and may be subject to a record fine by the federal government of up to $35 million under new rules that allow bigger assessments against safety-recall offenders.

But here’s the part with the worst implications for GM and the new image that it has been fashioning in the wake of the federal bailout in 2009 and its successful efforts to re-establish its product and brand: GM dragged its feet in informing regulators and dealing with the consequences of this significant safety problem.[more]

GM’s admission on this score has led to a rare public apology whose reverberations may only have begun. It simply may not be able to prevent significant damage to GM’s reputation and its brands, though the company’s approach likely will be more salutary than the combative strategy pursued by Toyota a few years ago when its massive “unintended-acceleration” recall greatly damaged the high regard of American consumers and hurt sales.

“We are deeply sorry and we are working to address this issue as quickly as we can,” GM North America President Alan Batey said in a statement. “The chronology shows that the process employed to examine this phenomenon was not as robust as it should have been.”

Outsiders were quick to agree. “I haven’t seen GM apologize since they apologized to Ralph Nader in 1966,” Clarence Ditlow, executive director of the Center for Auto Safety, told the Los Angeles Times. Ditlow pointed a finger at both GM and the NHTSA, saying, “This is a case where both … should be held accountable for doing a recall no later than the spring of 2007.”

To be sure, Ditlow is a disciple of Nader, the original car-safety crusader. And Batey—just promoted to his current spot after heading Chevy marketing and then serving as interim CMO for the company—is among many in the current cadre of top GM executives, including new CEO Mary Barra, who likely have no direct culpability in the matter.

But clearly some GM executives have been dragging their feet on this issue even over the last few years, and that places their inaction and culpability squarely within the post-bailout regime at the company. US Sen. Edward Markey, a Massachusetts Democrat, already has seized on GM’s foot-dragging as a reason to embrace his proposal for the feds to get more aggressive about investigating potential safety recalls.

In the meantime, in an era when corporate transparency is the order of the day, at least Barra seems to recognize the potential gravity of the situation.

“Today’s GM is committed to doing business differently and better,” the company said in a statement. “We will take an unflinching look at what happened and apply lessons learned here to improve going forward.”

FacebookTwitterLinkedIn