Following the recall of faulty airbags by Japanese manufacturer Takata, it’s timely to consider the impact product recalls can have on business.
Product recalls are a bugbear for companies. They are costly, time consuming and, if executed poorly, can cause severe damage to a company’s reputation. But, there’s a silver lining: a well-managed product recall can potentially bring a company into good light if it demonstrates a commitment to safety and the interests of consumers.
Some may claim that no publicity is bad publicity, but when you’re dealing with potential public health and safety risks, there’s no doubt that bad publicity exists (and faulty airbags has to be at the upper end of a public safety concern).
Public criticism in the context of a product recall can occur for two main reasons: backlash that a product is somehow defective or harmful; and backlash at the manner in which the recall was (or wasn’t) communicated and resolved. By being proactive and transparent, businesses can virtually eliminate the second source of public criticism.
In the case of the airbag recall, the ‘fault’ has occurred some way up the supply chain and so a number of car manufacturers have been affected (ranging from Ferrari to Honda). That being so, the brand value of affected car manufacturers is less likely to be harmed and so what really matters is how they respond to the recall and support their customers, especially given the shortage of replacement airbags and uncertainty as to which vehicles are in fact affected.
One thing is clear though: it’s better to over-communicate than to take the risk that key customers or stakeholders miss the message. Lack of full disclosure and unwillingness to aid has never served a company well in the face of a public health crisis; it only fuels public suspicion and criticism.
Up to 300,000 vehicles in New Zealand have been recalled because of malfunctioning airbags that either do not inflate or fire out pieces of metal when inflated in an accident - injuring people and even causing death.