FOR WENDY LEWIS STRICTLY

COMMUNICATION 3300: BUSINESS AND PROFESSIONAL PRESENTATION MANAGERIAL COMMUNICATION REPORT

General Motors Recall

Repairing Consumer Confidence By

A. Student

Summary

General Motors experienced one of the most historic recalls in history. Though not the largest, it is significant for a few reasons. The ethics of GM have been compromised. Collusion between G.M. and a government entity may prove to have caused the worst communication issue ever dealt with between G.M. and its customers, and within the corporation itself.

GM Recall 2

General Motors Recall Repairing Consumer Confidence

Randy Kester

This report will identify the problems, key elements of communication breakdown and provide solutions within the corporation and the consumer. Problems In 2001, G.M. was made aware of ignition issues on Saturn branded G.M. cars. In 2005, it became apparent that other models were also affected by the ignition switch problem where “excessive weight” on a key ring could turn the key to the “off” or “accessory” position, rendering the vehicle’s electronic functions powerless; Functions such as brakes, steering and airbag deployment were among the crucial functions.

Figure 1 Automotive News, 2014

Figure 2 GM.com, 2013

 2006- G.M. began to fix the problem on

new vehicles but did not change the part

number from the defective switch.

 2007- NHTSA becomes aware of the

faulty switch and does nothing. (Cox,

2014)

GM Recall 3

G.M. Bailout In 2008, the biggest financial crisis hit the U.S. since the Great Depression. The federal government bailed out Chrysler and G.M. to the sum $80 billion, $49.5 going to G.M. alone. (Gattuso, 2009) As a condition of the bailout, G.M. filed for Chapter 11 bankruptcy protection and began a restructuring that made the U.S. government a majority shareholder with a vested interest in its outcome. (Cox, 2014) Internal Communications Issue There was either NO communication between engineering and upper executives regarding the problem, OR collusion between them to not disclose information that resulted in 13 deaths that we know of to date. Was there collusion between G.M. and the government to not disclose information to the public to help foster the image of a healthy corporation that was now held by the government?

Figure 3 Financial releases from General Motors show a net profit of $3.1B from fiscal

year 2012-2013 (GM CY 2013)

Figure 4 Automotive News, 2014

1. $.57 part would’ve cost G.M. an

estimated $100 million in recall if done

in 2006. (Morici, 2014)

2. Recall now estimated to cost G.M. $1.3

billion, with estimates rising.

3. Stock is trading 20% down from

December of 2013.

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External Communications Issue

General Motors’ brand is damaged in the eyes of consumers. There was mass confusion on

which vehicles were recalled and what the process was to fix it.

Dealers did not receive accurate information or prompt shipments. Many are still waiting for the

new parts.

Solutions

U.S. Senate and House hearings have forced G.M. and CEO Mary Barra to be more

transparent with overall operations, but particularly with the recall. Two executives have been

fired from Communications and Human Resources.

Now that the information is out, G.M. is forced to repair trust with the consumer. An

informational website has been set up for consumers to make the recall repair smooth.

Consumers can find information on http://www.gmignitionupdate.com.

It is unclear how much liability G.M. holds for problems that occurred before bankruptcy

protection, but G.M. said it would honor any commitments and liabilities incurred with the faulty

ignition switch.

GM Recall 5

References

Cox, K. (2014, April 21). Why every driver should care about the GM ignition recall. The

Consumerist. Retrieved April 23, 2014, from http://consumerist.com/2014/04/21/why-

every-driver-should-care-about-the-gm-ignition-recall/

Drivers frustrated over lack of communication in GM recall. (2014, March 14). Drivers frustrated

over lack of communication in GM recall. Retrieved April 15, 2014, from

http://wivb.com/2014/03/17/drivers-frustrated-over-lack-of-communication-in-gm-recalls/

Gattuso, J. (2009). D.C. doesn't know how to run a car company. Advertising Age, 80(18), 4.

GM CY 2013 Results. Retrieved April 23, 2014, from

http://media.gm.com/content/dam/Media/gmcom/investor/2014/feb/q4-earnings/GM-

2013-Q4-Chart-Set.pdf

GM ignition recall safety information. (n.d.). GM Ignition Recall Safety Information.Retrieved

April 15, 2014, from http://www.gmignitionupdate.com

Krisher, T. (2014, April 14). GM replacing communications, human resources heads.

Winston-Salem Journal. Retrieved April 15, 2014, from

http://hosted.ap.org/dynamic/stories/U/US_GENERAL_MOTORS_PERSONNEL?SITE=

NCWIN&SECTION=HOME&TEMPLATE=DEFAULT

Morici, P. (2014, April 11). Morici: Five takeaways from the GM safety debacle. Statesman

Journal. Retrieved April 15, 2014, from

http://www.statesmanjournal.com/article/20140412/OPINION/304120022/Morici-Five-

takeaways-from-GM-safety-debacle

Wendler, A. (2014, April). 10 Largest auto recalls in history. MSN Autos. Retrieved April 23,

2014, from http://editorial.autos.msn.com/10-largest-auto-recalls-in-history