General Motors and the Chevy Cobalt Ignition Switch Crisis
It was Saturday, March 29, 2014, and Mary Barra, Chief Executive Officer (CEO) of General Motors (GM), was reading a letter of invitation from the families of Chevy Cobalt crash victims to meet with her the following week. The timing could not have been worse. Barra was scheduled to testify before the U.S. Congress on Tuesday, April 1st regarding the recalls of 2005-2007 model year Chevrolet Cobalts. Just the day before, on Friday, March 28th, GM had announced a third Chevy Cobalt recall. In total, 4.8 million vehicles worldwide had been recalled in connection with an ignition switch defect. There had been fatalities. It was Barra's 10th week on the job as GM's CEO. On February 7, 2014, just days before Barra had become CEO, GM had informed the National Highway Traffic Safety Administration (NHTSA) that a problem existed with the 2005-2007 model year Chevy Cobalt. GM stated in its report to the NHTSA that the problem appeared to be centered on the vehicles' ignition switch. The ignition switch's "torque performance" on these vehicles had not met GM's engineering specifications. The switches were easily jostled, and when jostled, the switches would sometimes move out of the "Run" position, causing the vehicle to stall. GM further explained that, depending on the timing of the switch moving out of the "Run" position, the airbags would not deploy. A vehicle stall, combined with the vehicle's airbags not deploying, had been a lethal combination. Following the first Cobalt recall in January 2014 and the NHTSA report in February, events had escalated rapidly. Lawyers across the U.S. had organized a class action lawsuit against GM. The U.S. Justice Department and the NHTSA had launched investigations. The media response had been hostile. Barra had been summoned to appear before the U.S. Congress. Beyond the public fallout was a large question: How could GM have ignored such a basic safety issue for such a long period of time? Such a situation suggested that there might be fundamental organizational issues within the company that needed repair as well. How was Mary Barra, CEO of GM, going to manage this crisis? The first decision would be whether to meet with the families of Chevy Cobalt crash victims.