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General Motors Ignition Switch Crisis

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Nicole Puddy

on 26 March 2015

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Transcript of General Motors Ignition Switch Crisis

General Motors Ignition Recall
Technology & Services
Some of Different Services
1.)Automobile manufacturing
2.)Transportation Equipment manufacturing
3.)Auto Lending

Competitors
Top 3 Competitors
1.) FCA US LLC
2.) Ford Motor Company
3.) Toyota Moto Corporation
Competition is driven by:
1.) Interest rates
2.) Consumer confidence
3.) Capital spending by corporate and the government

GM Recall Process
The Recall
Conclusion
Introduction to GM
Founded on September 16,1908
CEO is Mary Barra
Headquarters are located in Detroit, Michigan.
Founders are William Durant & Charles Mott
396 facilities on 6 continents
212,000 employees that speak more than 50 languages.

Timeline
2001:
GM detects the defect during pre-production testing of the Saturn Ion.
2004:
GM recognizes the defect again as the Chevrolet Cobalt replaces the Cavalier.
March 2005:
GM rejects a proposal to fix the problem because it would be too costly and take too long.
July 29, 2005:
Maryland resident Amber Marie Rose, 16, dies when her 2005 Chevrolet Cobalt crashes into a tree after the ignition switch shuts down the car's electrical system and the air bags fail to deploy.
December 2005:
GM issues a service bulletin announcing the problem, but does not issue a recall.

Timeline
April 2007:
An investigation links the fatal crash of a 2005 Chevrolet Cobalt in Wisconsin to the ignition defect, but regulators do not conduct an investigation.
Nov. 17, 2007:
The Office of Defects Investigation at NHTSA concludes that there is no correlation between the crashes and the failure of air bags to deploy, ending the proposed probe.
Dec. 19, 2008:
Bush approves a bailout plan, giving GM and Chrysler $13.4 billion in initial financing from the Troubled Asset Relief Program.
April 24, 2009:
GM says that it will scrap the Pontiac brand to invest more in Buick, Cadillac, Chevrolet and GMC.
June 1, 2009:
GM files for Chapter 11 bankruptcy.

Profitability
Depends on:
1.) Ability to originate
2.) Services
3.) Collect loans & leases
4.) Collect fees & interests on financing products

Brand of GM
Make anything from mini cars to heavy duty trucks. Also mono-cabs and convertibles.
Owns Chevy, Buick, GMC, Cadillac, Baojun, Holden, Isuzu, Jicfang, Opel, Vauxhall, & Wuling.
“Whether in Detroit, Frankfurt, Sao Paulo or Shanghai, our brands make an emotional connection to our customers from the very first time they get behind the wheel in any corner of the world.” –General Motors  

The Issue
GM noticed a defect related to this issue back in 2001 regarding the Saturn Ion.
In 2004 GM recognized the same defect in the Chevy Cobalt.
The notice of casualties due to this issue started in 2014. As of February 2015 the number of deaths was at 57 and is still rising.

Stakeholders & Publics
By: Nicole Puddy, Emily Morgan & Laken Loving
Publics are the future customers and people involved.
They have identified their primary stakeholders as:
1.)Customers, both fleet and individual
2.)Dealers
3.)Employees, both current and potential new talent
4.) Investors and stockholders
5.) Suppliers
6.)Communities in which they operate
7.)Governments at the national, state/provincial and local levels
8.)Nongovernmental organizations (NGOs)
“We view stakeholders as individuals or groups with whom GM has an ongoing relationship and impacts as the result of our business operations.”

http://www.gmsustainability.com/fancybox/approach_stakeholderEngagement.html

In February 2014 General Motors issued a recall for several models suspected of having a faulty switch that automatically turns the car off and prevents the airbags from deploying while the car is still in motion.
The problem is a part in the cars ignition switch that is 1.6mm less springy then it should be.
The key ignition area is sensitive and the slightest touch could cause this reaction.


GM notifies customers of affected vehicles in writing within 60 days after a recall announcement.
If I haven't received a recall letter in the mail, is there still a possibility that my vehicle has been involved in a recall?
"Yes. The vehicle specific information related to a recently announced recall may not be available at the time of the announcement. Recalls are issued by VIN and may not apply to every vehicle manufactured within a model year. There are multiple factors that determine if a VIN will be included in a given recall. For example, your vehicle could have been manufactured at a different time, in a different manufacturing facility or using different parts than those involved in the recalls."

https://recalls.gm.com/#/

Timeline
Oct. 26, 2010:
Consumer Reports says GM is considered "reliable" based on scores from road tests and performance on crash tests.
Sept. 4, 2012:
GM reports August 2012 sales were up 10 percent from the previous year, with Chevrolet passenger car sales up 25 percent.
Dec. 9, 2013:
Treasury Secretary Jacob Lew announces the government had sold the last of what was previously a 60 percent stake in GM, ending the bailout. The bailout had cost taxpayers $10 billion on a $49.5 billion investment.
End of 2013:
GM determines that the faulty ignition switch is to blame for at least 31 crashes and 13 deaths.

Timeline
Jan. 15, 2014:
Mary Barra becomes CEO of GM and the first woman to run a major automaker.
Jan. 31, 2014:
Barra learns of the ignition switch defect, according to GM.
Feb. 7, 2014:
GM notifies NHTSA "that it determined that a defect, which relates to motor vehicle safety, exists in 619,122 cars.
March 18, 2014:
GM appoints a new safety chief.
April 10, 2014:
GM starts a Speak Up for Safety campaign, aimed at encouraging employees to say something when they see a potential safety issue for customers.
June 16, 2014:
GM announced the recall of 3.2 million more cars, including Chevrolet Impalas and the Cadillac DTS, for faulty ignition switches.
March 23, 2015:
74 Indivudals who have died in a car accident have been linked to the ignition switch recall.

As of Mach 23, 2014...
Responses of Publics
Candice Anderson was charged with the murder of her fiancé after her car crashed with her driving and he in the passenger seat.
Candice dealt with guilt and struggles trying to rebuild her life.

http://money.cnn.com/video/news/2014/09/16/candice-anderson-guilty-but-gm-may-be-to-blame.cnnmoney/index.html

A look at Recent Sales...
After more than 26.5 million vehicles recalled, General Motors sold 2.5 million vehicles in the 3rd quarter of 2014.
This is General Motors best 3rd quarter performance since 1980…

Example of Gm Response
http://money.cnn.com/video/news/2014/10/08/gm-ceo-mary-barra-full-interview.cnnmoney/index.html

Handeled Differently?
GM could have notified there publics threw different outlets other than using social media.
GM should have notified anyone that may be affected once they noticed a glitch in the ignition switch.
More honesty should have been taken in the situation when it comes to there CEO.
A new safety chief should have been appointed way before the deaths occurred.
GM was unethical by rejecting a proposal to fix the problem in 2005 since it was too costly and timely.

Social Media Effects
Social media definitely had a big role in GM notifying anyone that was involved in the ignition switch recall.
But when it comes to improving or worsening the situation it could go both ways.
Worsen- people found out quicker and were able to come up with assumptions that were or were not true.
Improved- showed how GM reached out and tried to better the situation.

Twitter
Facebook
Facebook (August 29, 2014)
SWOT Analysis
Strengths:
-How big their company is
-Their branding
-The loyalty of the customers
Weaknesses:
- Lack of communication
- The incident itself
- Lack of facts to back up story
Opportunities:
-Hiring a new CEO
-Hiring a new safety chief
-Coming out with new models
-Stopped making the accord
-Sales market increased
Threats:
-Every other company
-The community effected
-The increased number of deaths

If you were the CEO of GM how would you respond if you had a car with a faulty switch that caused deaths?
Why do you think the sales have risen even after the deaths?
Does this change your opinion of GM and why?
Which Grunig’s model applies to this crisis?
Full transcript