The Detroit News today put the GM ignition-switch recall center stage noting that the developing auto recall crisis, not limited to GM, provides some lessons for an already embattled industry. The article also reminds readers of the billions that Toyota Motor Corp. paid — and the “incalculable damage to its sterling reputation for quality” — after its sudden acceleration crisis of 2009 and 2010 forced the company to recall more than 10 million vehicles.
Moreover, Detroit News also points out that automakers are on pace this year to break the all-time record for most vehicles recalled. In the wake of GM’s big recalls — 9.6 million vehicles recalled this year, including some more than once — many automakers have stepped up the pace of callbacks.
This clearly raises an issue of trust and transparency – qualities that are of the utmost importance in the way companies engage with customers, stakeholders, investors and, of course, the media.
In the case of GM, some have questioned why the company didn’t take steps to fix this problem “decades ago,” then citing cost issues – an argument that tends to enrage consumers. However, any business case for saving a few bucks on a recall is lost in the significant brand equity and trust that is lost with consumers.
There’s a lesson here for PR – even if purely from a communications standpoint. Companies need to assume that issues and problems that today are behind the scenes will eventually come to light, and when a company isn’t the one breaking the news, it will be in a reactive, defensive position as the story plays out.
What’s even more interesting is how situations like this impact industry peers that may not even have an issue. Investors, for example, tend to sell first and evaluate later, and in the face of overwhelming industry problems.
For example, Nissan Motor Co. addressed the recall issue from a process standpoint, noting that executives responsible for recall decisions have “complete autonomy” and there’s no connection between their personal compensation and company profits and losses.
This level of transparency is a strong step toward building trust with consumers and letting them know that there is, at the minimum, a reasonable process in place to identify recalls and take timely action when necessary.
In a communications age when information can circle the globe in a matter of minutes, companies need to identify issues quickly and then have a strategy in place to communicate with stakeholders and customers, or they risk letting the situation spin out of control.