GM execs brace for recall fallout

Years-long silence on ignition flaw puts company on defensive

The '07 Pontiac Solstice is among the 1.6 million cars included in the recall.

WASHINGTON -- Top General Motors executives are under intense pressure to explain why it took them a decade to order a fix for a faulty ignition switch that was used in 1.6 million Chevrolet, Pontiac, Saturn and Opel vehicles worldwide and is blamed for a string of accidents that killed 13 people.

It is a question that GM itself seems to be pondering as it faces a federal investigation and looks ahead to the prospect of lawsuits and penalties over its handling of the ignition problems.

GM announced an initial recall on Feb. 13, then expanded it last week to include 842,103 more vehicles globally.

Mindful, perhaps, of the backlash that hit Toyota during its unintended-acceleration crisis from 2009 to 2011, GM has struck an unusually contrite tone in its statements since the recalls, saying it is "deeply sorry" for its response to the switch defect.

Batey: “We will take an unflinching look at what happened and apply lessons learned here to improve going forward.”

"The process employed to examine this phenomenon was not as robust as it should have been," GM North America President Alan Batey said in a statement last week. "Today's GM is committed to doing business differently and better. We will take an unflinching look at what happened and apply lessons learned here to improve going forward."

There's little sign so far that GM will be able to contain the fallout. Last week, the National Highway Traffic Safety Administration announced that it has launched an investigation to determine whether GM moved in a timely manner to recall the cars after it identified the flaw. If the agency finds otherwise, GM could face fines of up to $35 million for a violation.

Joan Claybrook, a former NHTSA administrator and former president of the consumer group Public Citizen, said that the recall came too late and that GM's apology was insufficient.

"That was a desperate move on their part to avoid heavy penalties," Claybrook said. "Saying 'we're sorry' is not enough."

GM told NHTSA that it knows of 31 frontal crashes and 13 front-seat deaths in cases in which the faulty ignition switch had moved out of the "run" position, resulting in the airbags failing to deploy.

The clearest picture of what went wrong comes from a chronological report that the company filed with NHTSA last week.

In the document, GM said it first learned of the engine cutoff problem in 2004, around the time the 2005 Chevrolet Cobalt went on sale. Company engineers replicated the phenomenon in tests, but after considering the lead time, cost and effectiveness of potential solutions, they closed the inquiry without taking action.

GM says it received more field reports in 2005 of the Cobalt losing engine power. The next year, GM approved changes to the switch design by supplier Delphi Mechatronics; the changeover occurred during the 2007 model year. But it was not until 2011 that GM started a formal inquiry into a cluster of crashes of cars from 2007 and earlier in which the airbags did not deploy.

What remains unclear is when GM learned of the 13 fatalities, says Lance Cooper, a suburban Atlanta attorney representing the estate of Brooke Melton of Hiram, Ga., who died in 2010 at age 29 when the engine in her 2005 Cobalt cut off and she crashed.

Cooper has settled a lawsuit against GM on behalf of Melton on undisclosed terms.

He says he thinks GM went ahead with the recall because details of the faulty switch would have emerged this spring, when a lawsuit against Melton's dealership, John Thornton Chevrolet of Lithia Springs, Ga., is scheduled to go to trial.

As common as recalls are in the auto industry, automakers rarely go so far as to offer explicit apologies or acknowledge deficiencies in their internal processes for fear of opening the door to product-liability lawsuits.

At a legal cost, GM may be trying to send a message that it's confronting its old demons. It has spent nearly five years asserting that the post-bankruptcy company is different from Old GM in the way it treats customers. The recall gives GM the opportunity, albeit an uncomfortable one, to back up that claim.

"This is their chance to tell the customer: 'We're a different company. We're going to handle things the right way,'" says Dave Cole, chairman emeritus of the Center for Automotive Research in Ann Arbor, Mich.

That was the message in a USA Today op-ed piece late last week by Batey, which appeared under the headline: "GM: We're working to earn drivers' trust."

"We want our customers to hold GM and our vehicles to a high standard," Batey wrote. "If we don't measure up, there is a senior leadership team in place that is not afraid to act to make things better."

If its approach succeeds, GM may be able to insulate its brands from lasting damage. Arthur Henry, a senior analyst at the car-buying service Kelley Blue Book, says that Toyota's unintended-acceleration recalls had a short-term effect on consumers' stated attitudes -- but the effect dissipated as Toyota rebuilt its reputation for quality.

But Cooper, the Georgia attorney, says in this case GM deserves the bad publicity.

"I know a lot of good people at GM, and I know that GM is trying to turn itself around," he says. "But this is a black eye for the company, because of what they knew for so long and didn't do anything about."

Mike Colias contributed to this report.

Busted switch
Here is what General Motors has told U.S. auto safety regulators about 2 new recall campaigns involving older GM models.
The problem: The ignition switch is not sturdy enough, so the key can be jostled out of the “run” position by a heavy key chain or the motion of a car running off the road, cutting power to the car and potentially causing the airbags not to deploy in a crash.
The fix: GM will send a letter to owners the week of March 10, with the first parts available in early April. Until then, owners are advised to use the ignition key with nothing else attached.
Affected models: 2003-07 Saturn Ion, 2005-07 Chevrolet Cobalt, 2006-07 Chevrolet HHR, 2006-07 Pontiac Solstice, 2007 Saturn Sky, 2007 Pontiac G5; 2005-06 Pontiac Pursuit (Canada only), 2007 Opel GT (Europe only)
Scope of recall: 1.6 million cars, including 1.4 million in the United States
Known incidents: 31 frontal crashes in which 13 front-seat passengers died.

Source: GM

You can reach Gabe Nelson at gnelson@crain.com

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