How Branding Is Helping GM Survive Recall Disaster

How Branding Is Helping GM Survive Recall Disaster

The news about GM this year has been grim. We’re not even through 2014, and so far GM has had more than 60 recalls. The total cost will likely top $1 billion and involve more than 26 million vehicles.

And yet, GM just paid its shareholders a quarterly dividend in September. Despite everything, GM’s stock valuation is holding relatively steady.

How can a company that has been in the news all year for extremely negative reasons, continue to be valued on the stock market? Partly it’s a matter of brand management.

How Branding is Helping GM Survive Recall Disaster3 Branding Reasons GM Is Still Selling Cars
Earlier this year, congressional hearings exposed a culture of incompetence and/or denial at GM. Yet bad publicity has not led to widespread lower auto sales. Here’s why:

  1. The GM brand is insulated from actual customers. Broadly speaking, GM as a brand doesn’t mean anything except to Wall Street and the UAW. GM is essentially a holding company, one step removed from the customer, whose loyalty and relationships are with GM’s sub brands. As a result, GM itself is strategically insulated. Bad publicity for the parent company doesn’t necessarily trickle down to affect consumer perceptions.
  1. Most of GM’s sub brands enjoy tremendous customer loyalty. Think of Chevy or Cadillac. These automotive brands have built up loyal fans over decades. And GM has nurtured these audiences by putting out popular models, selling them at the right price point and creating successful advertising and image campaigns. What’s more, during its bankruptcy, GM strategically cut brands—such as Pontiac and Saturn—that didn’t have the same degree of customer loyalty.
  1. Managed strategically, a recall can build brand. Think about what a recall notice says to your customer. If you handle the moment correctly, a recall can convey the idea that you’re looking out for them and actually foster brand loyalty.

GM made shocking mistakes in its handling of faulty ignition switches and other safety issues. But thanks in part to savvy brand management, GM is still selling cars.

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