General Motors

Mary Barra, General Motors’ chief executive, is struggling to contain the fallout from the revelation that the carmaker failed for more than a decade to reveal concerns about the safety of ignition switches on some of its compact cars.

GM this week announced a slew of new recalls and more than doubled its expected charge this quarter to $750m. On Tuesday, Ms Barra and David Friedman, acting administrator of the National Highway Traffic Safety Administration, appear before the US House of Representatives’ energy and commerce committee to explain what went wrong and why.

Robert Wright and Shannon Bond report from New York

 

John Gapper

General Motors CEO Mary Barra

General Motors’ widening of the recalls of US cars and trucks for safety and other defects is a challenge for Mary Barra, its new chief executive, as she prepares to testify to Congress this week. Read more

General Motors and Malaysia Airlines are both in trouble but one is giving a lesson in how to handle a fatal crisis while the other is offering a masterclass in how not to. There is a glaring contrast in the behaviour, and ability to cope with public criticism, of Mary Barra, GM’s chief executive, and Ahmad Jauhari Yahya, the chief executive of Malaysia Airlines – although Ms Barra has a simpler task.

Andrew Hill

Straight-talking Karl-Thomas Neumann, chief executive of Opel, has given the world of reputation management a useful new metaphor for brand-blight: the “red elephant”.

At the Geneva motor show, he told the FT that the General Motors-owned German marque had suffered from a perception problem:

There was a red elephant standing beside the car that nobody talked about which says: ‘You can’t buy me because I’m an Opel’ … and we are addressing this now.

Not welcome in the showroom (image: Dreamstime)

Whether or not Mr Neumann has mixed up “elephants in the room” and “red flags”, I find the image compelling enough to be worth spreading.

Plenty of companies persist in assuming that a brand’s historic reputation will sustain it, without tackling the scarlet pachyderm that may be frightening off customers. Antidotes include: 1) making such a noise about the brand that it drowns out the trumpeting of the creature standing alongside; 2) improving the quality of the product so that it is no longer dwarfed by the public (mis)perception about it. Read more

Andrew Hill

GM's off – and Barra's driving (Bill Pugliano/Getty Images)

Of two immediately obvious facts about Mary Barra, chief executive elect at General Motors, the more interesting is not that she is a woman but that she is a company “lifer”.

To my mind, GM looks as though it is signalling that it has turned the corner following the trauma of government bailout, just as Citigroup did when it appointed career insider Michael Corbat as chief executive last year. Read more

In 2010, seven managers from PSA Peugeot Citroën and five from Chang’an Automobile met in Shenzhen, southern China, to lay the groundwork for a new car factory. Three years later, Capsa, a 50-50 joint venture between the French and Chinese companies, is in the final stages of preparing a 1m square metre plant for the September launch of Chinese-made premium cars under the DS brand. “Because we were beginning from a blank sheet, people wanted to make it as perfect as possible,” says Gilles Boussac, Capsa’s president, between meetings with his team of mostly Chinese managers. “So often in China, if you’re trying to rework or improve something, it takes years to achieve.”

John Gapper

When a senior executive gets the boot from a company, it is usually covered up with some pablum about seeking new opportunities. So General Motors’ statement about the abrupt departure of Joel Ewanick as its head of global marketing is remarkable.

The FT reported it in this way:

“The resignation is disappointing but he failed to meet the expectations that a company has of an employee,” Greg Martin, a GM spokesman, said in an interview. He declined to give further details.

 Read more

John Gapper

The travails of old media businesses are well-known but I’m starting to feel sympathy for advertisers and media buyers.

That sentiment was brought on by looking (in old media fashion) at the front of the print section of the New York Times today. The lead article is about Madison Avenue’s scepticism on whether Facebook is a good advertising medium and underneath that is a piece on Dish Network’s new ad-skipping digital video recorder.

Facebook’s advertisers have been struggling with whether display ads on the social network will produce results, with General Motors pulling its $10m Facebook ad budget ahead of the intial public offering.

Meanwhile, Dish has upset US television networks in the “upfront” season where they show off their next season wares to advertisers but producing a box that automatically skips all the commercials between network shows. Read more

Andrew Hill

It’s a cruel coincidence that the latest death knell for Saab comes within days of the latest extension of car guy Bob Lutz’s lease on life.

On Thursday, a Swedish court rejected the carmaker’s attempt to seek protection from its creditors, pushing a decision on potential insolvency into the hands of suppliers and employees awaiting payment for materials and labour. Saab is appealing, but the obituaries for the group – now selling well under 100,000 units annually – are already being written. Read more

Andrew Hill

The demise of Norwegian electric car pioneer Think Global will drain some of the energy from advocates of electric vehicles.

They should recharge by shifting their view from blueprints of cars and studying instead more comprehensive plans that aim to combine vehicle, infrastructure and services. Read more

John Gapper

The General Motors initial public offering looks as if it will be successful – and will be priced well in excess of the range first set by the underwriters. That will let the US government sell down its 61 per cent stake substantially and perhaps exit entirely next year.

So who deserves the praise for this achievement? GM’s new management (even with the revolving door at the top), the government for its act of tough love in financing GM’s purge in Chapter 11 bankruptcy, or former GM executives led by Rick Wagoner?

My money is on the government and its auto industry taskforce led by Steve Rattner for not listening to Mr Wagoner’s dire warnings about Chapter 11 and for realising that GM could only be properly restructured in bankruptcy. Read more

John Gapper

Steve Rattner, the Obama administration’s former “car czar” who has a book out about the bailing out of General Motors and Chrysler, gives an interesting summary of his first impressions of Detroit to Peter Lattman in the New York Times.

So, for example, I found that the culture in Detroit, and at General Motors in particular, was even more bureaucratic and more stultified than what I would have guessed before I got there. The financial controls were far weaker than anything I would’ve imagined before I got there. On the positive side, GM had better projects than I would’ve imagined and it had also brought its manufacturing efficiency to a much higher level than I would’ve predicted.

That can be summarised as: GM was a terrible company making surprisingly good cars. Or: Detroit itself was in a bad way, whereas its manufacturing plants were healthy. Read more

John Gapper

Companies controlled by the US government seem to have a lot of difficulty maintaining an amicable balance of power between their chairmen and their chief executives.

Harvey Golub’s abrupt resignation as chairman of American International Group after a stand-off between him and Bob Benmosche, AIG’s chief executive, is a second example of the phenomenon. Read more