The Australian Competition and Consumer Commission (ACCC) has just announced it is taking Mazda to court on behalf of consumers who bought cars that turned out have serious faults, and which the company failed to fix. Mazda have stated they will 'vigorously contest' the case.
Whatever the outcome of the court case, it appears Mazda are in trouble following a series of management failures. In this respect, the crisis facing the company as a result of the ACCC's action is typical - crises are ALWAYS the product of management failures.
In Mazda's case the series of failures include these -
Quality control - the cars were produced with a series of faults, some of which caused the vehicles to lose power, or headlights to cut out at night. These are described in news reports as 'potentially life threatening', and which in some cases called for complete engine replacements.
Repair and maintenance - in spite of the presence of technical specialists, this function failed to get to the bottom of the problems and fix them.
Customer service - the company repeatedly failed to meet customer expectations either as to the repair times for their vehicles, or on the option of a replacement. This aspect goes to the heart of the ACCC's case, which it claims was a breach of consumer law.
Recall - this October Mazda was forced to recall 35,000 of its cars with diesel engines, further eroding confidence in its quality control system.
According to the ACCC, Mazda were also evasive and misleading in their communications with customers, either over the nature of the faults, their seriousness, the possibility of repair, and whether a full replacement was an option.
This last element reflects less of a management failure than perhaps a clash of values, though this too can be understood as an inability to align the organisation with customer and societal attitudes as to what is acceptable behaviour. This has fed into the lawsuit with the ACCC accusing the company of 'unconscionable conduct'.
An interesting aspect of the situation consists of the industry context, first shaped by the VW diesel emissions scandal. Mazda bears no responsibility for this directly, but has been caught up in the more intense level of scrutiny all car makers have been subject to over the past few years. Possessing the capability to detect and appreciate the significance of such changes in the operating environment is an important part of effective crisis management.
Just how damaging all this will be for Mazda is hard to predict. In its statement the company was able to point towards positive customer surveys, including satisfaction with its levels of service. This may well be true for the bulk of its customers, nevertheless the ACCC court action has and will continue to hurt its reputation, and this will almost inevitably translate into sales losses. In the face of this, management will need to consider their priorities, whether it is more important to address the failures that have brought them to this point, or whether they are content to continue with the kind of practices that have provoked the ACCC into their lawsuit. Either way, it is a genuine management decision, which means that if it ends badly, it will be another management failure to add to the previous ones.
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