The reputational risk posed by the Ford Kuga recall
2017 broke to the news that the Ford Kuga 1.6 vehicles were being recalled owing to the fact that they are spontaneously bursting into flames. According to a report by Lance Branquinho on Wheels 24, entitled Ford Kuga recall: What’s gone wrong and who is to blame, 48 cars are reported to have exploded (although Ford will only admit to 46) and one person has been killed. Besides the destruction of property and the (potential) loss of life, what consequences will this have on the company’s reputation?
What is the cause?
In the above-mentioned article, Branquinho mentions that the statement that Ford came out with in order to explain the reason why the Kugas were exploding is owing to South Africa’s warm climate.
This reason is illogical and not well-thought out. The reasoning behind is non-existent. As Branquinho points out, the Kuga retails in Australia – where temperatures reach highs similar to those experienced in South Africa – however our Australian cousins have not experienced the same fate.
The reputational damage that this statement has done to Ford’s company image is enormous. It has painted the company as not thinking things through, not applying logic to their business. Would you want to buy a car built by an illogical company?
Product recall best practice
Product recalls have to be dealt with according to the best practice laid out by the Consumer Protection Act 68 of 2008. Notice 490 of 2012 of the National Consumer Commission states that it is the individual supplier’s responsibility to rectify any safety defects if they become aware of these.
The fact that Ford only recalled the Kugas after the Consumer Commission had ordered them to recall them – while the company had known about this defect for a number of years before hand – damages their company’s reputation immensely. Who would want to drive a car made by a company who knows that their vehicels may spontaneously burst into blames?
Product recall and insurance
When an item as costly as a car is recalled, the owner of that vehicle does not want the headache of having to deal with the insurance consequences. It is not their fault that the car has to go away for repairs so why would they need to do the admin?
Well, Ford does not seem to share these sentiments.
In an article on the TimesLive website, entitled 9 things you need to know about the Ford Kuga recall, it was reported that Ford was prepared to work with Kuga owners who are insured in dealing with the loss of their vehicles. However, in the case of non-insured owners, it was stated that these individuals would be dealt with individually. No specifics were mentioned. The company also stated that they would not extend the Kuga warranty in the case of the cars being kept, even though there is a history of things going wrong with these vehicles.
As can be seen above, the Kuga-recall debacle has caused Ford untold reputational risk. In effect the message that is going out is that they do not care about their customers or their needs. Had Ford been employing Riskonnect’s mechanisms for managing risk, this predicament could have been completely avoided or the repercussions significantly reduced. They would have been able to analyse and manage these reputation risks and align them with the risk appetite and tolerance of the organisation. Controls could have been correctly assigned and managed to reduce or eliminate the threat. Using predictive analytics based on historic incidents and claims would also have revealed the problem much earlier and perhaps avoided the public outcry currently underway.
Riskonnect provides a single, unified technology solution that not only provides critical insight into all the strategic and operational risks across the enterprise, but also lowers their total cost of risk by empowering their risk decision-makers through leading-edge technology.
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