ND Expert: Recalls damage GM, Toyota brands

General Motors (GM) on Thursday (Feb. 13) announced it is recalling nearly 780,000 Chevrolet Cobalts and Pontiac G5s in North America because the compact cars’ engines can shut down unexpectedly and cause deadly crashes. This follows a massive global recall yesterday by Toyota Motor Corp. of its popular Prius hybrid to fix a software glitch that could cause the car to stall.

Kaitlin Wowak, assistant professor of management in the University of Notre Dame’s Mendoza College of Business, says both companies’ brands will suffer.

“Today’s recall by GM is going to have a significant tangible and intangible impact on the company’s performance,” says Wowak, who specializes in supply chain management and disruptions. “GM stopped making the defective cars in 2007, but they are still in the marketplace. Consequently, GM is going to spend a considerable amount of time, money and effort locating and repairing them. The recalled cars have caused several fatal crashes; therefore, GM has to respond quickly for the safety of its consumers and to repair inevitable brand damage. The fallout from this recall will last a long time.”

According to Wowak, Toyota, once known for producing high quality products, has slipped with regard to quality control.

The Prius’ software settings have been found to produce heat in the car’s circuits, damaging parts and, in rare circumstances, shutting down the hybrid system while the vehicle is being driven, causing it to stall.

“The Prius recall is not only going to cost the company millions of dollars, it will further tarnish Toyota’s brand, which the firm has been battling to rebuild since the beginning of a string of recalls in 2009,” says Wowak, who recently won a research award for a study examining the product recall process.

Wowak’s study “Why do Some Product Recalls Succeed and Others Fail?: A Grounded Theory Investigation of the Recall Process” earned Best Empirical/Theoretical Paper honors last year from the Decision Sciences Institute.

Contact: Kaitlin Wowak, 574-631-6685, Katie.Wowak@nd.edu

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