July 2, 2014

GENERAL MOTORS GOES ALL-IN ON RECALLS:

One story you could tell is that this just goes to show how little GM has been able to change from its disastrous old ways. Low quality, indifference to the consumer … meet the new GM, same as the old GM.

But I wonder if something else isn’t going on, something smarter. I wonder if GM hasn’t decided to go hog wild on the recalls because at this point they have nothing to lose.

There’s a point in a bad scandal where things have gotten about as bad as they could possibly get. New revelations don’t make things worse, because they hardly could be any worse. Instead, they get lost in the deafening noise of prior bad news.

At that point, it’s a good idea to announce anything that you’ve been worrying about might one day come out. People won’t really notice now, and by the time they’ve recovered sufficiently to take an interest, your worrisome story is old news.

This was the logic behind “big-bath accounting,” which became very popular during the dot-com era. And it was sound logic. So I wonder if GM has decided to do something similar here. To wit: Recall every part that has ever given anyone any trouble. Suffer through the hit to your brand. And then know that you’re sailing into the future clean, without any potential scandals lurking under the rocks of your customer-service organization.

Yeah, but if you’re GM can you ever be sure of that? And how much did the U.S. Government know about this stuff before it sold its stock?