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A brief defense of embattled General Motors

Rick Newman
Senior Columnist
The Exchange
General Motors CEO Mary Barra testifies on Capitol Hill in Washington, Wednesday, April 2, 2014, before the Senate Commerce, Science and Transportation subcommittee. Barra is back before Congress, where members of a Senate subcommittee are expressing doubts that the culture at the nation's No. 1 automaker has really changed. (AP Photo/Pablo Martinez Monsivais)

This headline ought to trigger a double-take: “GM SUVs ace challenging crash test.” What? That GM? Isn’t it an incompetent corporate villain and overall menace to society?

Actually, it’s not. General Motors (GM) is clearly in a spot of trouble, on account of flawed ignition switches that should have been recalled long ago but weren’t, leading to at least 13 deaths in fatal accidents and an unknown number of injuries. GM screwed up badly, especially since fixing the problem involving about 2.6 million Chevrolet Cobalts and other vehicles that have now been recalled would have been relatively cheap and easy — especially compared with the $3 billion or more the problem may now cost GM.

But media critics and their accomplices in Congress and elsewhere have now moved into the inevitable pile-on phase of the controversy, in which it’s so easy to jab at the heartless corporate bully that nobody will call you to task. “The old General Motors is back,” declared the Daily Beast, recalling a string of overworn headlines from the bad old days of GM’s bankruptcy and federal bailout. In the rare likelihood you’re unaware, GM got a $50 billion federal bailout from U.S. taxpayers and only repaid about $40 billion before the government cut its losses and sold its final shares in the automaker.

If the 2009 bailout places a special burden on GM to be perfect, then yeah, GM is terrible. Compared with other automakers, however, GM is doing just fine. One example is a recent report put out by the Insurance Institute for Highway Safety, which conducts crash tests and ranks vehicles based on the results. In its latest batch of tests, two GM SUVs the Chevrolet Equinox and GMC Terrain were the only ones out of nine to earn a “good” rating, the highest IIHS confers. The Toyota Highlander earned an “average,” the Toyota 4Runner earned a “marginal” and the Honda Pilot earned a “poor,” the lowest rating. Toyota and Honda are often considered the paragons of excellence; well, not this time.

Above average

In the latest J.D. Power quality rankings, all four G.M brands — Chevrolet, GMC, Cadillac and Buick — scored above the industry average. Ford (F), often lauded for being the one domestic automaker to turn itself around without a bailout, scored far below average. Out of 26 categories, GM had the top-ranked vehicle in 8 of them, or 31%. That’s much higher than its market share of about 18%.

In Consumer Reports’ annual reliability rankings, GMC is the highest-ranked American brand. Other GM nameplates are middling performers, but the biggest problem is the Cadillac CUE infotainment system, which is meant to mimic a tablet device but seems overcomplicated to some users. At any rate, a fidgety touchscreen isn’t nearly as severe as the problems involving build quality, performance and durability that plagued GM in the not-so-distant past.

Chevy’s Corvette Stingray was the 2013 North American Car of the Year. The Chevy Silverado pickup earned the same honor in the truck category. And the Chevy Volt was car of the year in 2011. In addition to those vehicles, new models such as the Chevy Impala sedan, the Buick Encore crossover and the entry-luxe Cadillac ATS have impressed critics and buyers alike.

GM’s sales have dipped slightly this year, but that may have been due to bad winter weather in the Midwest, where some of its strongest markets are. GM’s March sales, meanwhile, came in stronger than expected, with the recall controversy apparently not denting the numbers at all. GM has also managed a 1.6% average increase in transaction prices so far this year, including incentive spending, according to KBB. That indicates the kind of pricing discipline that usually only works when quality is solid. Old GM, by contrast, was notorious for slashing prices in order to move lackluster cars it tended to overproduce.

There’s no arguing that GM and its CEO, Mary Barra, must make amends with customers it broke trust with and failed to protect. That itself is something the company would have resisted doing seven or eight years ago. Whether old or new, GM today is much better than it used to be, and at least equal to its competitors in most of the categories that matter. The real question may be whether that’s good enough.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.