Motor vehicle manufacturing faults, sadly, are a pretty regular issue. And recalls which are badly handled are a common example of how issues can become reputational crises.
While Volkswagen in Australia provided the latest headlines about mishandling a recall, recent history shows that some carmakers seem unable or unwilling to remember what happened last time and learn from the past.
For VW, the trigger was the coronial inquest into a fatal accident on Melbourne’s Monash Freeway when a heavy truck crashed into the back of a Golf which reportedly suddenly lost power.* The company’s expert witness told the Coroner the vehicle’s information showed no sign the car was at fault. Yet the story unleashed a flood of complaints about sudden deceleration and other faults in various VW models.
Attention centered on the high-tech DSG automatic transmission, already the subject of recalls in Singapore, Malaysia, China, Japan and the USA. But VW resisted clamour for a similar recall in Australia.
However after two weeks of “unprecedented pressure from disgruntled customers,” and Australia’s peak motoring body calling for them to “come clean” on safety issues, the embattled company announced a recall of almost 26,000 VW cars, quickly followed by a recall of 6,000 Audis and 1,700 Skodas with the same gearbox.
It appears VW was caught between fully understanding a genuinely complex technical issue and responding to increasingly negative public perception. But there is no doubt it was a reputational disaster. As Age Motoring Reporter Toby Hagon commented: “The proud German brand that has spent decades building a reputation for engineering prowess and being a step above rivals has been bruised and battered from a public outcry over multiple failures and the way the company has handled them.”
One company which seems not to have learned this lesson is Hyundai, notorious for their response in 1998 when 46,000 Excels were returned to fix faulty suspension. After initially refusing to recall the cars, the company backed down, though insisted it was not a recall but a “field service campaign.” They even headed their official announcement with the quotation: “The Federal Office of Road Safety has not asked Hyundai to conduct a recall.”
Roll forward to March 2013 when Hyundai started notifying nearly 280,000 Australian customers about a faulty brake-light switch. Once again they initially resisted a recall, then finally backed down, but argued it was not a “recall” because the Federal Transport Safety Department had advised it was “not a safety issue.” Explain that to angry customers!
Effectively managing a product recall should be near the top of the list of potential crises for any manufacturer (even Rolls Royce had a recall last year). But too many companies seem not to be prepared and not to remember the past. Whether it’s cars or food or toys or other consumer products, without proper management processes in place, even the simplest recall can easily become a real crisis.