2014 General Motors recall

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On February 7, 2014, General Motors (commonly known as GM) recalled about 800,000 of its small cars due to faulty ignition switches, which could shut off the engine during driving and thereby prevent the airbags from inflating.[1] The company continued to recall more of its cars over the next several months. As of June 30, 2014, GM has issued 45 recalls this year, which have involved nearly 28 million cars worldwide and over 24.6 million in the United States. GM says it expects to charge $1.2 billion against its second quarter earnings as a result of its ongoing recalls, and the charge could get worse as lawsuits and investigations continue.[2]

The fault had been known to GM for at least a decade prior to the recall being declared.[3] Some have suggested that the company actually approved the switches in 2002 even though they knew they might not meet safety standards.[4]

The company is facing multiple investigations into why it did not attempt to fix these faulty ignitions sooner, including a federal criminal probe,[5] as well as a probe led by Anton Valukas, the latter of which produced a report which GM made public on June 5, 2014.[6] On March 31, 2014, GM's CEO, Mary Barra, met with the families of some of the people who had died in car crashes as a result of the faulty switches.[7] Barra testified at a House Subcommittee hearing on April 1; in her testimony, filed in advance of the hearing, she told the United States House Energy Subcommittee on Oversight and Investigations that "When we have answers, we will be fully transparent with you, with our regulators and with our customers."[7]

The parts necessary to replace the defective cars' ignition switches, and thereby resolve the problem which led to the recall, are expected to become available on April 7, 2014. Repairs are expected to begin the same day.[8]

Initial and subsequent recalls[edit]

The first recall was announced on February 7, 2014, and involved about 800,000 Chevrolet Cobalts and Pontiac G5s.[1] On March 31, GM announced it was going to recall over 1.5 million more cars of six different models, due to faulty power steering. Of these, over 1.3 million were in the United States, and three of the models were also involved in the faulty ignition recall. The total number of cars recalled during 2014 was, as of April 1, 6.26 million.[9] On May 15, GM recalled 2.7 million more cars, bringing the total number of recalled vehicles in 2014 to 12.8 million worldwide, 11.1 million of which were in the United States.[10]

On June 16, 2014, GM announced they were recalling 3.4 million more cars, all of which were produced from 2000 to 2004. They also announced that they intended to replace the cars' keys because if they did not, the ignition switches could rotate, causing the car's engines to shut off and disabling power steering.[11]

On June 30, 2014, GM announced they were going to recall 8.45 million additional cars, almost all of which were being recalled for defective ignition switches. This announcement brings the total number of recalled cars in North America to about 29 million.[12]

Cause of ignition failure[edit]

The reason the ignition switches shut off even though they weren't supposed to was because the "switch detent plunger", which is designed to provide enough torque to keep the ignition from accidentally turning off, did not supply enough torque. General Motors was aware of this potential problem, and held meetings about it, as early as 2005.[13]

Quantifying fatalities[edit]

The faulty ignitions have been linked (by GM itself) to 13 deaths and 31 crashes.[7] The company only counts incidents which resulted in head-on collisions in which the airbags did not deploy. It does not include, for example, an incident where after a car's ignition switch failed, the car "spun out, hydroplaned, hit an oncoming vehicle and rolled off the road, dropping 15 feet into a creek."[14] In a collision in which two young women in a Chevrolet Cobalt were killed when the ignition switch shut off the engine, GM only counts the death of the woman in the front seat, because the death of the woman in the back seat was not caused by the failure of the airbag to deploy.[15] Most of the victims were under age 25.[16] On June 3, 2014, Reuters published an analysis concluding that the faulty switches were responsible for 74 deaths, based on Fatality Analysis Reporting System data. General Motors disputed its conclusion, and stood by their original figure of 13 deaths after the report was released.[17]

Public disclosure of the problem[edit]

The defect was not disclosed by GM nor was it discovered by government regulators or transportation safety agencies. Instead, public knowledge came about because Lance Cooper, a Marietta, Georgia attorney who sued GM on behalf of the family of a woman who had died in a crash, obtained thousands of pages of documents from GM and took the depositions of several GM engineers. According to Sean Kane, the president of a vehicle safety research firm, Cooper "single-handedly set the stage for this recall."[18]

Reaction to the recall[edit]

The families of the 13 people who died in car crashes involving the recalled vehicles gathered outside the US Capitol prior to Barra's testimony on April 1. They were joined by four Democratic politicians in support of tougher rules regarding the disclosure of automobile defects.[19] At the Capitol, they also said that their relatives had died "because they were a cost of doing business GM style."[20] The recall cost GM more than $3 billion in shareholders' value over four weeks.[21]

One mother, Laura Christian, created a Facebook page to bring together the family, friends and those who support them.[22]

Congressional testimony[edit]

Barra's testimony also stated that she doesn't know why it took nearly a decade to try to initiate a recall, but that she has accelerated efforts to fix the switches,[5] and that she offers "my sincere apologies to everyone who has been affected by this recall, especially to the families and friends of those who lost their lives or were injured. I am deeply sorry."[23] These remarks were sharply criticized by some of the victims' family members, one of whom dismissed Barra's meeting with them as a mere PR stunt,[7] and by Heidi Moore, who wrote that "[Barra] saying sorry to Congress won't cut it" and that GM "has been good at telling stories that the public wants to hear."[24] Also attending the hearing will be David J. Friedman, the Acting Administrator of the National Highway Traffic Safety Administration (NHTSA), who will be asked why he did not act sooner to recall the cars with the faulty switches, since the NHTSA was aware of the problem before the recall.[19] Friedman's written testimony blames GM for not conveying "critical information" to regulators which could have led to recalls years earlier.[19] What follows is an incomplete list of statements Barra made during her testimony which received exceptional media attention:

  • She testified that General Motors would employ Kenneth Feinberg as a consultant to help them decide how to compensate families of those injured by the recalled cars. This decision was praised by Paul M. Barrett, who wrote in Businessweek that "...bringing in Feinberg is an excellent first step" because he has more than 20 years of experience in mass-injury cases.[25]
  • Barra also said that she asked attorney Anton R. Valukas to help find out why GM took so long to initiate a recall of the defective cars,[26] and that a full account of why this did not happen sooner would have to wait until Valukas's investigation's results were announced.[27]
  • Another of her widely-reported remarks was that she found GM's concern about the cost of replacing the faulty switches "disturbing" (this was in response to Congresswoman Diana DeGette telling the subcommittee that it would have only cost 57 cents to fix each faulty ignition switch).[28]
  • After being asked by Missouri Senator Claire McCaskill whether a GM engineer had apparently lied under oath, Barra confirmed that this had indeed happened (or at least seemed to).[27] McCaskill later appeared on This Week, where she said of GM that "They’ve tried to lawyer up and play whack-a-mole with these lawsuits, and terrible things have happened,” and that “Now it’s time for them to come clean, be transparent and most of all make victims whole no matter when this deadly ignition caused heartbreak in their families.”[29]
  • During the hearings, Barbara Boxer asked Barra why, during the 33 years she worked at GM prior to becoming the CEO in 2013, she never heard anything about the faulty ignition switches. After Barra failed to give a substantive answer, Boxer exclaimed to her that "You don't know anything about anything," and that "If this is the new GM leadership, it's pretty lacking."[30]

Also in April 2014, federal safety regulators testified before Congress that they had expected the airbags in the defective cars to be able to deploy for 60 seconds after the engine stalled, but General Motors later told the Associated Press that they actually can only do so for 150 milliseconds.[31]

Reactions to Barra's testimony[edit]

In the Wall Street Journal, Holman Jenkins praised the fact that Barra didn't argue that the failure to recall the defective vehicles was due to "...the problems of a company that no longer exists and a product that's no longer made." However, for the same reason, he also criticized her for suggesting that the company would be more customer-focused with her as the CEO than it was when GM first found out about the faulty switches.[32]

Lawsuits[edit]

A large number of lawsuits have been filed in response to the recall, by those claiming to have been injured due to the recalled vehicles' faulty switches. These lawsuits include at least two class action ones, one filed by a man from Myerstown, Pennsylvania on April 2 and another filed in federal court in California.[33] Two other lawsuits have also named Delphi Automotive, the car parts manufacturer who produced the defective switches, as one of the parties partly responsible for the deaths caused by the now-recalled vehicles.[34]

GM's statements on the safety of recalled cars[edit]

General Motors has stated that the recalled cars are safe to drive unless you have additional items attached to the key ring. However, some consumer advocacy groups have urged GM to declare the cars unsafe for driving no matter what, saying they still pose a danger.[35] In fact, a lawsuit was filed in Texas on April 4, with the plaintiffs aiming to force GM to declare its recalled cars unsafe to drive, but the judge, Nelva Gonzales Ramos, refrained from doing so that day, saying she needed more information.[36]

Repairs[edit]

GM said the parts needed to repair the faulty ignition switches were expected to become available on April 7, 2014. However, that same day, CNN Money contacted six dealerships, none of whom had received these parts. A spokesman for GM, Alan Adler, said that he didn't know how many replacement parts had been shipped to dealerships, or when the majority of parts would be available.[37]

Fine[edit]

On April 8, the NHTSA fined GM $28,000 dollars because the company hadn't supplied the agency with the information it had requested it give them by April 3, and the agency charged them $7,000 for each day after then that GM didn't provide this information.[38] On May 16, GM agreed to pay the Department of Transportation the maximum fine of $35 million for delaying the recall of the defective cars they recalled earlier in 2014.[39]

Executive departures[edit]

On April 14, 2014, GM announced that two of its executives—Selim Bingol, senior vice president for global communications and public policy, and Melissa Howell, senior vice president for global human resources—were departing the company. GM did not say whether Bingol and Howell had resigned or were fired.[40]

Valukas report[edit]

On June 5, 2014, Valukas' report on the recall was made public. In it, he asserted that the company's failure to fix the defective switches sooner was not due to a cover-up on the company's part,[41] but rather due to "their failure to understand, quite simply, how the car was built."[6] The report led to Barra firing 15 of her employees.[41]

Feinberg plan[edit]

On June 30, 2014, Kenneth Feinberg unveiled a plan to compensate victims of recalled GM cars, including an agreement to pay "whatever it costs" to do so. At a press conference held by the National Press Club, Feinberg added that the compensation fund will accept applications from August 1, 2014 until the end of the year, and that he has the last word as to how much the victims' families should be compensated.[42] [43]

References[edit]

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  2. ^ GM's latest recall of 8.4 million cars is one of the largest in history. The Verge. Retrieved 30 June 2014.
  3. ^ CBS/AP (23 May 2014). "General Motors announces 30th recall of year". CBS News. Retrieved 28 May 2014. 
  4. ^ Spangler, Todd (30 March 2014). "Delphi told GM ignition switch didn't meet specs". Detroit Free Press. Retrieved 4 June 2014. 
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  12. ^ Bennett, Jeff (30 June 2014). "GM to Recall 8.45 Million More Vehicles in North America". Wall Street Journal. Retrieved 1 July 2014. 
  13. ^ Glinton, Sonari (31 March 2014). "The Long Road To GM's Ignition Switch Recall". NPR. Retrieved 6 April 2014. 
  14. ^ Gregory Wallace. Poppy Harlow and Amanda Hobor (4 June 2014). "How Brooke Melton's death led to the GM recall". CNN Money. Retrieved 4 June 2014. 
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  40. ^ Vlasic, Bill (14 April 2014). "2 Executives Leave G.M. After Wide-Ranging Recall". The New York Times. Retrieved 15 April 2014. 
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  43. ^ [1]