Commentary

GM Has More To Fix Than Ignitions

I have a confession to make. I know a former airline captain. An excellent pilot, actually. But who had (and still has) a serious drug problem. And I'm pretty sure the airline knew (he's not flying now, and it wasn't an American airline, or even a major global carrier.) And I know I'll never, ever fly that airline again, not because one of their captains had a serious problem, but because there's no way the company didn't know, and because they did nothing about it. 

General Motors' situation right now around the recall of 1.6 million cars isn't all that different in some respects. Everyone gets recalls. It happens all the time, every year. But stuff happens and automakers who take action right away avoid the worst of it. General Motors knew for years about the faulty ignition switches in cars like 2003 to 2007 model-year Chevy Cobalts, Saturn Ions, and Pontiac G5's: Under certain conditions, the ignition could jiggle to the off position, which would also disconnect the electrical supply to the airbags, preventing their deployment. General Motors last year determined that the problem had caused a dozen fatalities. 

Lawsuits will certainly come in droves, as will subpoenas to employees present and past. But the question, as one observer told me, may not be "who knew," but "who didn't." It's impossible to believe that the National Highway Traffic Safety Administration (NHTSA), the government, the Justice Department, GM executives, the government's bailout czar Steve Rattner, and others on top didn't know about this problem. It's not like it wasn't in the press, or that there was some kind of disconnect between the dealers and the company. 

As Jeff Green reported today in Bloomberg, 10 years ago journalists and the automaker's own engineers, dealers, PR folks, and execs were hip to the defect. In 2005, he notes, the New York Times reported that dealers were telling owners not to use key rings with heavy things on them, as they might be apt to turn the key to the off position. Consequent crashes and fatalities notwithstanding, this is a problem of trust and confidence for a consumer. Boomers had soured on the domestic automakers because of quality issues anyway. But now? What's the next generation going to say? "Maybe dad was right." 

I know something about the business, and I know a lot of the current models at Chevrolet and the automaker's other brands are strong. But even I won't be able to prevent this thought from sneaking into my head at the dealership: "Hm, it looks like they fixed the product, but did they fix the corporate culture?" When you buy a car, you buy the company. As the insider I spoke with put it, "If people think you can't make an ignition switch that works, and that you did nothing about the problem when you discovered it, how are you going to convince people to buy an autonomous car when that technology evolves? Am I going to buy one of your driverless cars? Really? What we are talking about is trust and confidence. 'And when did we get so stupid, we couldn't make an ignition switch. Who wired this car?'"

Oh, and, by the way, where was NHTSA and the government "owners" of GM around all of this, during the bailout? If the government is going to take the automaker to task, does the government get immunity? Again, who gets to be the fall guy? "That place is a beehive like any other place. It's a big, small place. You have risk management reporting to legal and to the CFO who is involved in administration, human resources and the whole engineering community and product liability. And sales and marketing and CRM and owner retention and relationships with dealers and service department, reporting into one guy," said the insider I spoke to. 

The automaker is giving owners of the recalled cars free loaners and $500 vouchers for their next purchase. I don't know. If the president of the aforementioned airline came to my door and told me the captain I know is just an anomaly and that as a thank you for remaining a loyal customer he'll give me $500 off my next ticket, I'd say thanks and then go with another carrier. Just to be safe.

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2 comments about "GM Has More To Fix Than Ignitions".
  1. Paula Lynn from Who Else Unlimited , March 14, 2014 at 9:42 a.m.
    Do you think everyone involved personally should be fined at __ _% of their income during that time ? Deniers of knowledge would bang down the door. Do you think if the fine was appreciable enough this would help the next time an error happens ? To team or not to team. Would the "talk" around stop ? Probably not completely. Would productivity suffer ? Since average income people cannot afford (or be approved) for the average new car anymore (MediaPost articles), what do you think how this affects future business knowing we all know how important the car manufacturing business is to the economy ? Who are responsible and how can this be improved ?
  2. Karl Greenberg from MediaPost , March 14, 2014 at 9:57 a.m.
    Good questions. Bureaucracy means never having to say "mea culpa" And human nature is what it is: one way to get a thousand people in a line to take a step backward is to say "anyone who wants to tell me what they know about this please step forward" Judging from how GM is making cars now and evolving their products there has been a big change there, and lets not forget they don't have eight brands to take care of, making things easier in that regard. But the change has to be positive: responsibility (personal or corporate) has to be incentivized