In the first half of this year, General Motors recalled more vehicles than it sold during the last eight years. The number is now up to 29 million and it includes nearly every model of car and truck the company puts on the sales lot. It’s hard to see this as anything other than bad news for GM, which rebounded from bankruptcy five years ago with the help of a substantial government bailout.
There are concerns about how badly the company’s reputation may be damaged by the episodic recalls, and whether the $50 billion bailout of GM in 2009 was worth the effort, or if the taxpayers ended up buying a lemon.
But there are new facts beginning to emerge that suggest a new era of corporate responsibility at GM and perhaps among other automakers. This includes accountability for overall vehicle safety.
Government transportation agencies have been prodded toward greater vigilance in safety monitoring. Problems with the ignition switches in GM cars led the National Highway Traffic Safety Administration to open an investigation into whether the problem might afflict other manufacturers. Shortly after that probe was announced, Chrysler issued a recall for 696,000 vehicles with potentially similar problems.
The latest recalls announced by GM resulted from the company’s largest internal safety investigation in its history. The company has also restructured management to give more authority to executives in charge of product safety and compliance. It seems that GM’s pledge to root out its problems may be resonating with consumers.
Amidst the news of record recalls, GM still managed to increase sales in June, moving more cars and trucks than any other manufacturer. On Wall Street, GM stock is up from when the first recalls were announced earlier this year — even though fixing the problems will cost the company more than $1 billion.
The recall story may end up being about a company that chooses not to gloss over a problem but decides to take its medicine, fix the problems to the satisfaction of its consumers and convert its corporate culture into one that puts quality and safety on a much higher plane.
We’d hope that we could expect that from a company that received a substantial infusion of public financing on the grounds that it was too important to be allowed to fail during the 2009 recession. General Motors has long been viewed as a symbol of American industrial prowess. Its handling of the recall issue may begin to suggest that the company is living up to prior accomplishments.