Commentary

GM Makes Changes; Dealers Carry Weight

Incompetence, failures and tragedy led to the years-long refusal to act on faulty ignition switches. That was the verdict from U.S. Attorney Anton Valukas, whom GM had appointed for its internal examination of the Cobalt ignition switch recall. 

But CEO Mary Barra and her predecessor, Dan Akerson, were cleared of involvement, though 15 engineers and managers and executives are out. Now, the company is focusing on compensation for victims, with Kenneth Feinberg overseeing the program.

Barra on Thursday announced, and in the wake of the report's release, reiterated some changes already in place and announced new ones: Jeff Boyer is the new VP of vehicle safety; the company is installing 35 product safety investigators; there will be a "Speak Up for Safety" program to encourage employees to blow the whistle; and a new produce Integrity organization. 

General Motors may not be able to close the book on this for some time, but at least this chapter ends with a bright note for the company. May was a huge sales month, thanks to the weather and that extra weekend. And, particularly for GM, it is also thanks to loyal customers and a strong dealer body. 

The automaker posted a 13% sales increase last month, giving it the best May in seven years and best sales of any month since 2008. And the company expects to see market share improvements. 

The improvements speaks to the stubborn nature of consumer perception. While bad perception is exceedingly hard to extirpate once it sinks its roots into the popular awareness and shopper mindset, it's not all that easy to get that seed to sprout in the first place. 

Look at Toyota. They had a lot of bad press a couple of years ago, and (like everyone) are fielding recalls. It's done nothing to hurt peoples' perception of the brand. And even if you do really foul up peoples' perception of your brand, you can turn things around with great products. 

I remember covering the Ford/Firestone fiasco some years back, thinking at the time, something like, "Well, Ford's finished. This is it. It's done." At the time they — and the rest of the domestics — were truck companies at retail and car companies only in the fleet business. Needless to say, Ford is still around and stronger than it's been in years. Leadership, product, period. 

Still, I'm a knee-jerk type: When the recall fiasco started to steamroll, a stockbroker friend said, "Now is the time to buy GM stock. Actually, wait a few weeks for things to get worse." I thought was about the dumbest advice I'd ever heard. I just said "Oh, and I have a house to sell you in the Everglades." 

But GM will roll past this. And part of the reason for that is the dealer body, which hasn’t gotten too much attention. A friend bought a car three years ago — not a GM — and this week drove it to the dealership for scheduled inspection. He told me how, while sitting there sipping the regulation styrofoam cup of coffee, a couple of salespeople strolled over and started giving him the sell on a Kia Forte hatch. "I like my car." That didn't seem to work. "Sure, but come over here for a second and take a look at the new Forte5. He was clearly irritated that, in this day and age, he had had to be party to the W.C. Fields act. And he said he'd be less inclined to go back. Is that a lost sale for Kia? Probably not, but it's not a exactly consideration builder.

All of those people with Cobalts and other recalled GM vehicles are going into dealerships to get their cars fixed. If they had been turned off by what happened there those sales numbers might not have been so good. And they certainly won’t be in months to come.

But GM dealers are clearly doing a good job dealing with this, and they deserve credit. Good service and sensitive people can make the difference between loyalty and solid reputation and disenfranchisement and a lost customer.

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