GM Clams Up After Stopping Shipments Of Chevy Cruze – Forbes

Posted: Saturday, March 29, 2014

General Motors’ General Motors’ move to stop shipments of the most popular version of its Chevrolet Cruze may be a concession to the new “transparency” regime of CEO Mary Barra, which she quickly has established to staunch the damage from the company’s massive and messy ignition-switch recall of decade-old cars.

But raising fears about the safety of GM’s best-selling car of today may create a lot of near-term pain for the company and its dealers with no guarantee of the intended long-term gain.

On Tuesday, with the industry’s monthly sales reports, will come the first snapshot of how the American car-buying public is reacting to the awful news of how GM mishandled the ignition-switch issue for several years. And there have been some indicators that consumer concern — and disgust — with the whole fiasco is retarding showroom traffic for GM brands.

2014 Chevrolet Cruze LTZNow the news that GM might be concerned about a defect in its most popular sedan could create an additional chilling effect.

A lot of mystery surrounded GM’s sudden move late this week to yank from its supply chain 2013 and 2014 Cruze compacts with 1.4-liter engines. GM wouldn’t say why it issued the order, USA Today reported. There was no official statement on GM’s news-media web site.

The order late Thursday covered a model that accounts for about 60 percent of Cruze sales and about one-third of dealers’ Cruze inventories.

Cruze accounted for about 14 percent of all Chevrolet vehicle sales in the first two months of this year, as its best-selling vehicle after the Silverado pickup truck. Cruze was GM’s top-selling car last year, as well, with sales of 248,000 units in 2013. The car also comes with a 1.8-liter naturally aspirated engine and a 2-liter turbodiesel.

The move left dealers scrambling on Friday to find out more details from GM, so they could answer questions from Cruze buyers who can’t get their cars immediately, USA Today reported.

“I have no details,” GM spokesman Alan Adler told the newspaper. “I’m sure somebody knows” why the order was issued, but neither he nor other GM spokesmen would provide further information.

Such a “stop” order is a decisive way to prevent safety-defective cars from getting into customers’ hands and forcing a recall later to fix them. So that’s apparently a good thing that GM may or may not have done before the ignition-switch recall.

Dealers say such halts are routine and almost always related to a safety problem, USA Today said. Dealers can continue to sell cars, but can’t hand them over to buyers until the issue that triggered the halt is fixed.

The move also could be consistent with Barra’s promise that GM will handle every potential safety concern now in a different way. It could represent an example of the stepped-up vigilance that Barra has installed. Maybe one month ago such a stop order never would have been executed.

The problem with the way the stop order has been handled so far is that it has been done opaquely rather than transparently. Therefore it doesn’t fit the new narrative of openness and honesty that Barra has been trying to create.

There may be very practical reasons, including legal ones, that GM didn’t publicly announce the stop order or wasn’t immediately more forthcoming about its nature.

And it may be that the stop order on sales of the 1.4-liter Cruze turns out to have nothing to do with safety. Or it could turn out to be something very minor — something that wouldn’t even draw news-media attention in an earlier era.

But this is a new era. And that requires a new lens on the issue for GM, even in this matter. Barra may not believe its handling of this issue could affect her diligent attempts to enforce a new culture of safety-consciousness and openness at the company, but it likely will.

 

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