GM recalls a sour note, spoiling positive reviews for its vehicles
By Doron Levin
FORTUNE — The product safety uproar at General Motors Co. comes at an especially awkward and frustrating moment for the No. 1 U.S. automaker: Its models have been enjoying more acclaim from reviewers and ratings agencies than at any time in its modern history.
GM (GM) vehicles today are held in unusually high regard by Consumer Reports, a publication that is extremely influential with shoppers. Others, like J.D. Power & Associates, have conducted surveys reflecting rising satisfaction among buyers of GM models to be extremely high.
Thus far it’s not clear whether revelations about GM’s slowness to correct a safety problem with ignition switches is depressing sales of its vehicles in the U.S. (GM says, for the record, it’s not.) The sales tally for March, which will be released in early April, could confirm that consumers are shaking off the negative GM news.
Whatever the short-term impact on consumers due to safety concerns, experts increasingly are impressed with quality and reliability improvements showing up in Cadillac, Chevrolet, Buick and GMC vehicles.
“Until a few years ago, GM was a different kind of company,” said Gabriel Shenhar, senior test engineer for Consumer Reports. “GM concentrated on low cost and discounting, and didn’t worry too much about the customer. They were known for cheap components, outdated technology and a hasty development process.”
But GM leadership prior to the bankruptcy had been assigning higher priority to developing top-notch cars and were assigning more human talent to critical development roles, Shenhar said. The result was demonstrably better vehicles. He cited the Chevrolet Silverado, the magazine’s top-rated pickup and the Chevrolet Impala, its top-rated fullsize car.
Consumer Reports recommends 10 of GM’s 2014 models, compared with five for Ford (F) and two for ChryslerFiat. Nissan, likewise, has 10 recommended models, while Honda (HMC) has 11 and Toyota (TM), 14.
Mary Barra, GM’s chief executive officer since January, famously declared at an employee town meeting, when she was a senior executive in charge of product development: “No more crappy cars.” She was at the same time admitting GM’s failures while exhorting the troops to “stop playing defense and to stop explaining why third-party criticism of GM was wrong.”
In the early days of the last decade, GM brands lagged badly behind those of Asian manufacturers, especially Honda and Toyota, contributing to weak sales, deep price discounts and the need to borrow cash to fund research and development. The poor trends culminated in GM’s financial collapse in late 2008 and its bankruptcy filing in 2009.
Toyota, which was hit with a safety recall due to unproven allegations of unintended acceleration in 2009, suffered a loss of momentum in sales and later recovered. The Japanese automaker benefitted from a deep reservoir of customer good will, built up over years of high ratings for its automobiles.
GM potentially is facing a crisis of trust, in which consumers might be skeptical of new, post-bankruptcy GM’s commitment to finding and fixing defects in a timely manner. The automaker acknowledges 12 deaths and 31 accidents due to the ignition problem, with multiple Congressional hearings sure to publicize further GM’s safety slipups.
The hearings also will be a chance for Barra – if she represents GM – to argue persuasively that the automaker has turned over a new leaf, that its concern for customer safety is as tangible as the quality of its vehicles.