GM must address recall soon to avoid damage to reputation

Fri Mar 7, 2014 3:37pm EST
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By Ben Klayman

DETROIT (Reuters) - General Motors Co (GM.N: Quote) needs to get through its ignition-switch recall and the resulting federal investigation quickly to avoid any lasting damage to its brand, but the federal probe could keep the problem in the public eye for at least six months.

Analysts and academics warn that a misstep by GM could leave it with a lingering headache, something Toyota Motor Corp (7203.T: Quote) experienced from 2009 to 2011 with recalls linked to sudden acceleration. The Japanese automaker was criticized for being slow to react to complaints and initially blaming the drivers.

GM is currently interviewing employees dating back to the discovery in 2004 of the problem with the ignition switch, which has since been linked to 13 deaths, sources previously said. Meanwhile, U.S. safety regulators have opened an investigation into whether the No. 1 U.S. automaker reacted swiftly enough in its recall last month of more than 1.6 million vehicles.

GM Chief Executive Mary Barra on Tuesday in a letter to GM employees said she deeply regretted the circumstances but was pleased with the company's response and the focus will be on customer safety and satisfaction.

Moving past the recall and related fallout will be critical to ensure the Detroit company continues the rebound since its 2009 bankruptcy reorganization, analysts said.

"They need to get past this as quickly as possible," said George Cook, a marketing professor at the Simon Business School at the University of Rochester.

"You cannot be reactive in dealing with the American car-buying public," added Cook, formerly an executive at Ford Motor Co (F.N: Quote) for 10 years. "You have to be proactive and I think they'll be forgiving if it's not really, really serious. People have short memories about that stuff."

GM's recall was to correct a condition that may allow the engine and other components, including front airbags, to be unintentionally turned off.   Continued...

General Motors Co's new chief executive Mary Barra addresses the media during a roundtable meeting with journalists in Detroit, Michigan January 23, 2014. REUTERS/Carlos Osorio/Pool