The late safety recall mystery: GM’s massive US recall

Car buyers, motorists and commuters in the Philippines have not heard nor seen any of the following: the Chevrolet Cobalt, Pontiac G5, Saturn Ion, Chevrolet HHR, Pontiac Solstice and Saturn Sky. None of these General Motors vehicles have ever been offered in this country except perhaps on the gray market—but that is unlikely.

In a sense, we are lucky that these six GM models were not made available here because they are now the subject of a huge safety recall due to a defective ignition switch that can shut off a car’s engine and electrical system and disable its airbags. GM admitted it had linked the defect to 31 crashes and 12 deaths since it was first alerted to the problem in 2004, or ten years ago. In fact, a second chronology filed by GM with the National Highway Traffic Safety Administration (NHTSA) said that it had received reports as early as 2001—three years earlier than previously disclosed—of the ignition switch problem.

Initially, last Feb. 13, GM recalled 778,000 cars worldwide but expanded it to 1.6 million on March 4. The models in question use the same ignition switch and belong to an older (2003-2007) generation. GM discontinued production of Pontiacs in 2009 and of Saturn vehicles and the Cobalt in 2010.

A MYSTERY. But why did it take GM ten years to issue a recall?  It’s a mystery that the United States Justice Department has begun investigating. A panel of the House of Representatives that oversees consumer product safety will hold hearings in a few weeks while a House committee announced it would conduct its own investigation and hearings and sent letters to GM and the NHTSA demanding extensive records.

The recall is a major embarrassment not only for GM, but also for the NHTSA which failed to open a broader investigation after probing two of the Cobalt crashes. The safety agency, under mounting pressure over its own failure to act on complaints about the recalled GM cars, defended itself, saying that the data available to them at the time did not contain sufficient evidence of a possible safety defect trend that would warrant the agency opening a formal investigation.

But a former NHTSA associate administrator for enforcement who retired in 1997 said that GM’s 2005 technical service bulletins to dealers recommending that they advise owners to remove “unessential items from their key chain” should have resulted in a priority investigation. Reports and complaints from owners had indicated that if a knee hit the ignition switch or the key ring was too heavy, it could turn off the engine and the car’s electrical system and disable the airbags. The Center for Auto Safety said that GM should have recalled the vehicles no later than 2007. Federal law requires a manufacturer to inform the NHTSA of its plan for a recall within five business days after it becomes aware of a safety problem, or face a civil fine.

CHRONOLOGY. GM’s chronology says that throughout the 10-year period, the company was involved in claims and lawsuits in which allegations were made regarding the ignition switch issue that is the subject of the recall. Aside from private lawsuits, GM faces the possibility of a criminal investigation by the US attorney’s office for the Southern District of New York which investigated whether Toyota misled investigators and the public about the unintended acceleration of Toyota cars that caused injuries and deaths and made the carmaker recall about 9.4 million vehicles. Toyota has settled the four-year case with the Justice Department for $1.2 billion. The settlement included an unusual admission of wrongdoing by the company.  Now, Toyota is separately in talks to settle hundreds of state and federal lawsuits filed against it claiming wrongful death and personal injury.

GM is accelerating its own internal review of the delayed recall, led by a former US attorney who was the court-appointed examiner in the Lehman Brothers bankruptcy case.  GM is somewhat protected by its restructuring agreement with the federal government that rescued the then ailing automaker. Under that agreement, GM is protected from legal claims stemming from incidents before it declared bankruptcy in June 2009. Lawyers for 200 potential plaintiffs—mostly victims of crashes involving the recalled cars or the victims’ relatives—may challenge the validity of the restructuring agreement.

NEW GM CEO. On March 18, Mary T. Barra, the new chief executive of GM, confronted the safety issue herself by holding a press conference, her first meeting with reporters since the 1.6 million cars were recalled last month.  Two months into the job, she apologized for what happened and pledged to fix faulty ignition switches and to explain why GM failed for ten years to correct a problem it knew existed. She answered questions methodically, marking a departure in the auto industry where corporate chiefs routinely avoid talking about recalls unless subpoenaed by Congress.

Barra said she expected to be called to testify before congressional committees next month. She also faces investigations by federal safety regulators and the Justice Department. Unlike some other corporations that have had public crises, GM has not sought professional help from crisis management firms outside. How she navigates her straightforward strategy will be closely watched in the weeks ahead.

On March 20, Barra named Jeff Boyer to the newly created position of vice president, Global Vehicle Safety.  Boyer, 58, has spent nearly 40 years in a wide range of engineering and safety positions at GM. He will have global responsibility for the safety development of GM vehicle systems, confirmation and validation of safety performance and post-sale safety activities, including recalls.

PORSCHE RECALL. Meanwhile, Reuters reported from New York that Porsche is cooperating with US safety regulators in the recall of all 785 units of the current model year 911 GT3 sports cars to replace the engines.  Porsche told owners to stop driving the cars because they could catch fire from an oil leak caused by a loosened fastener. The new engines will have “optimized fasteners”, the Volkswagen AG unit said. Of the 785 GT3 models that will have engines replaced, about 400 were shipped to the United States and about half of those have been sold. The GT3 is the sportiest of the 16 variants of the Porsche 911 sold in the US market and is often driven by their owners on race tracks.

Sources: International New York Times, Reuters