A product recall is one of the most uncomfortable situations any corporation can find itself in. Apart from the significantly high costs involved, these will also cause serious damage to the particular brand’s image. Things aren’t any different in the automotive world either. From Toyota’s unintended acceleration fiasco to the wave of recalls caused by faulty airbags provided by Takata, there have been quite a few of these over the past few years. And interestingly, several of these recalls could have been avoided if proper action had been taken by the top management when certain defects were brought to their attention at an early stage. The best example is General Motors’ recent debacle caused by faulty ignition switches.
This particular issue, a fault in the ignition switch that causes the engine to turn off while the car is in motion and prevents the air bags from deploying, was reportedly detected way back in 2001 during the pre-production testing of the Saturn Ion. Although there were proposals to fix the problem after the same defect was detected in the Chevrolet Cobalt a few years later, GM allegedly rejected it as the cost involved would be too high. However, a number of fatal crashes that were caused by the electrical system shutting down led to probes, and many years later, in 2013, GM admitted that the defective switch was to blame in most of these crashes. After Mary Barra became CEO, GM started officially recalling millions of vehicles that were found to have been affected.
The defect is believed to have caused 124 deaths and 275 injuries in all, leading to more than 2.6 million vehicles being recalled. It’s also faced with more than 4,000 claims submitted for a total of $594 million in settlement. In hindsight, it would have been much cheaper and less damaging for the carmaker to have fixed it early on. More importantly, many lives would have been saved.