GM learns from Toyota how not to handle a crisis
For years General Motors Co. has wanted to be more like Toyota Motor Corp. It wanted to sell more passenger cars like Toyota. It wanted Toyota’s reputation for reliability. But in one area, GM is doing everything it can to not be like Toyota.
As federal safety officials began investigating the cause of fires that followed test crashes of its Chevrolet Volt electric vehicles, GM shifted into communications overdrive, trotting out senior executives and engineers to talk about the issue and launching a customer-care initiative.
Analysts say the Detroit automaker wants to be sure it is not seen as sitting on its hands and downplaying a safety issue — a trap Toyota fell into after a deadly 2009 car crash killed four people and set off fears of sudden uncontrolled acceleration in Toyota and Lexus vehicles.
Toyota responded slowly and ineffectually to the growing crisis because it was hampered by a top-down management style that gave short shrift to customer complaints, according to a report by a special Toyota advisory panel in May.
GM moved quickly to allay customer fears, said Eric Noble, president of the CarLab, an industry consulting firm in Orange. GM said any Volt owner concerned about safety could borrow a free GM vehicle until the issue is resolved.
So far, “only a handful” of Volt owners have requested loaner vehicles, the automaker said.
“This is a smart move on GM’s part,” Noble said, “because the total exposure to GM is infinitesimal if you think about the small number of Volts that are out there on the road.”
The company also is not afraid to talk publicly about the fires.
Mark Reuss, the president of GM’s North American operations, and Mary Barra, the company’s senior vice president of global product development, held a telephone news conference Monday to explain their understanding of the problem, noting that the fires occurred only in test situations up to three weeks after the crashes and that there have been no reports of spontaneous fires or blazes started by collisions.
They said GM has “a senior engineering team” working on “changes to eliminate concern of potential post-crash electrical fires.” It also is working with the National Highway Traffic Safety Administration to discover the source of the problem. GM said the fires can be prevented by draining all electricity from the battery before storing the damaged vehicle. (Safety officials drain gas from conventional vehicles destroyed in crashes to prevent fires.)
To be sure, fires caused by batteries in electric vehicles weeks after a crash test aren’t nearly as severe a crisis as what Toyota faced, but GM and the rest of the auto industry want to avoid being seen as unresponsive.
“Toyota was studying its problem and tried to determine what the problem was, but they kept studying and didn’t communicate,” said Jeremy Anwyl, chief executive of auto information company Edmunds.com. “And what the automakers learned is that in today’s world that’s not always good. You have to communicate before you have all the facts.”
The lesson applies to any manufacturer of a consumer product, especially if there is a safety issue.
“The expectations around candor and transparency are awfully high,” Anwyl said.
GM appears to be following an old Toyota playbook.
Soon after launching its Lexus luxury brand in 1989, Toyota received one complaint of a cruise-control-switch malfunction and learned of an incident in which the lens on a high-mount brake light melted.
Fearful that reports of the problems would damage its efforts to portray Lexus as a brand with industry-leading quality, Toyota issued a recall of about 8,000 LS 400 vehicles in its initial sales.
Toyota had Lexus dealers deliver loaners to people’s homes, repaired the recalled cars and returned them washed, detailed and with a full tank of gas, according to “Satisfaction: How Every Great Company Listens to the Voice of the Customer” by Chris Denove and James D. Power IV.
Anwyl said the incident became the “textbook example of how to handle a recall. People were wowed by how Lexus would go the extra mile.”
Like Lexus at its launch, GM is dealing with leaders, trendsetters and early adopters when it comes to Volt customers, Anwyl said.
And just as Toyota used Lexus to cement its image as a high-quality auto producer, GM sees the Volt as a transformative vehicle that demonstrates the company’s technical prowess and its commitment to alternative-fuel vehicles that reduce oil dependence and pollution.
GM said that its market research show that 60% of drivers who are familiar with the Volt are more likely to consider a Chevrolet vehicle for their next purchase.
“It’s a great lift for Chevrolet as a brand,” said Joel Ewanick, GM’s marketing chief.
A bigger problem for GM than post-crash-test fires in the Volt is the slow sales of the vehicle, said Noble of the CarLab. Through October, only 5,000 of the 2.1 million vehicles that GM sold in the U.S. were Volts.
The Volt, which can travel about 40 miles on battery power before a gasoline engine kicks in and acts as a generator to extend the range an additional 300 miles, has been hurt by its high price compared with small, fuel-efficient gasoline engine cars, he said.
The price starts at about $40,000, before a $7,500 federal tax credit. But most buyers also will pay up to several thousand dollars more for a home-charging station. Even after the tax credit, the Volt is almost double the price of a similar-size Hyundai Elantra.
Sales of the car have been so slow that consumers should view the vehicle almost as “beta test,” in which a manufacturer puts a product in the hands of a limited number of users to flush out faults and bugs, Noble said.
Volt owners shouldn’t be surprised if problems crop up, and they should be on the lookout for even minor defects, said Clarence Ditlow, who heads the Center for Auto Safety.
“Never buy a new vehicle in its first year of production unless you want to be a test pilot,” Ditlow said. “The engineers never catch everything on the proving grounds.”