Recall storm engulfs GM
Federal inquiries, updated filing broaden scope of switch crisis
One second before a drunken driver crossed the center line of a rural Pennsylvania highway and slammed into Esther Matthews' 2005 Chevrolet Cobalt, black-box data shows, her car's engine turned off.
Matthews and her 13-year-old granddaughter in the front passenger seat died at the scene. Despite the severity of the April 2009 crash, the Cobalt's airbags never deployed, and investigators hired by the National Highway Traffic Safety Administration in the following days couldn't figure out why.
Lawyers told the family it wasn't worth the time or effort to pursue a case against General Motors because the automaker was weeks away from bankruptcy.
"A drunk driver hit her head-on, and that's what we went with," Matthews' daughter-in-law, Leanne Matthews, told Automotive News. "We just dropped it."
Now, Esther Matthews and seventh-grader Grace Elliott are two of the 12 fatalities that GM has linked to a defective ignition switch that can cause airbags to fail in a crash. GM last week revised the number of deaths down from 13 after it realized one victim was counted twice, but one study said there could be hundreds more and the toll is all but certain to rise as investigations continue.
The situation has snowballed quickly for GM since it announced a recall of 1.6 million small cars last month and said it was "deeply sorry" about its response. A company that started the year on a wave of positive press surrounding its new CEO and its emergence from government ownership is suddenly facing an investigation by federal safety regulators, upcoming congressional hearings and a potential criminal probe by the U.S. Justice Department.
GM has hired Anton Valukas, the lawyer who investigated the 2008 disintegration of Lehman Brothers, to help lead an internal probe of the company's failures. GM shares fell nearly 10 percent last week alone.
Two analysts estimated the cost of repairs at less than $100 million. But that expense could be overshadowed by an inevitable flood of lawsuits and any reputational damage inflicted by the recall, which auto safety advocate Clarence Ditlow has likened to the infamous Ford Pinto fiasco of four decades ago.
Ditlow, head of the Center for Auto Safety, said a federal vehicle-fatality database lists 303 deaths in crashes involving the recalled Cobalts and Saturn Ions with no airbag deployment. GM disputed the validity of that conclusion, saying the data contain no evidence that the ignition defect was to blame in those accidents.
As the recall crisis grows, it threatens to put GM through an uncomfortable rerun of five years ago, when the company's near-collapse turned it into a political football and national punching bag.
"Indirectly, another cost of the recall is the time that senior management will spend focusing on it," Stephen Brown, an analyst with Fitch Ratings in Chicago, wrote in a report Friday. "GM currently has several significant restructuring actions under way globally, as well the launch of key new vehicles. The recall is likely to divert some management attention away from these other important activities at a critical time for the company. That the company's top senior leaders are relatively new to their positions could add to the challenges."
GM has until March 25 to provide reams of documents to Congress, and it must answer 107 questions from NHTSA by April 3.
Rep. Fred Upton, R-Mich., chairman of the House Committee on Energy and Commerce, said he plans to hold a hearing "in the coming weeks." Upton led an investigation of the Ford Explorer-Firestone tire recall in 2000.
Sen. Claire McCaskill, D-Mo., said she would hold a Consumer Protection subcommittee hearing in April. Upton's committee and the Senate Committee on Commerce, Science and Transportation intend to examine GM's handling of the recall as well as any failures by NHTSA.
Meanwhile, dozens more consumers have filed complaints with NHTSA in recent weeks claiming that their vehicles shut off unexpectedly, in some cases leading to crashes. An entry dated Tuesday, March 11, said that in August 2011, a 2005 Cobalt "crashed after going out of control when the ignition switched off on the interstate at 60 mph. The steering locked. The [antilock brakes] did not function. When it crashed into the guardrail the airbags did not deploy."
GM previously said its engineers first documented ignition problems in 2004, but a new timeline it released last week reveals even earlier signs of trouble. According to a timeline filed with NHTSA, GM just last month discovered a 2001 internal report related to "low detent plunger force" -- that is, not enough spring resistance -- in the ignition switch of a preproduction Ion. The report stated that a design change resolved the issue.
The recall is related to a similar problem, which was quietly fixed in 2006 with the use of a longer detent plunger and stronger spring to create more torque.
Another early incident occurred in 2003, when GM said a service technician -- presumably at a Saturn dealership -- witnessed an Ion stall. The technician replaced the car's ignition switch, believing that it had been worn out from the additional weight of "several keys" attached to the driver's key ring.
GM said in two timelines it has filed with NHTSA that it sent dealers a service bulletin in December 2005 instructing them to tell customers who complain about stalling to remove "unessential items from their key chain." The bulletin also said dealers could give customers a small insert for their ignition key to reduce the chances that the car would accidentally turn off.
But depositions in a lawsuit related to a fatal 2010 Cobalt crash and news coverage at the time indicate that the bulletin had been released by May 2005, possibly as early as February.
Around that same time, Donna Justice was pleading with GM to take back the orange 2005 Cobalt that her 23-year-old daughter, Jessica, had bought a few months earlier. Eventually, after Justice complained to the Better Business Bureau, GM agreed to a refund, minus a deduction for the 2,800 miles on it.
"I've never worked so hard for something," Justice said last week. "I'm sorry, that's my child -- my only child -- you're talking about. You can't tell me that there's no fix."
Justice, who lives south of Cleveland, said the Cobalt stalled repeatedly, but technicians at her dealership insisted they could find nothing mechanically wrong. They first blamed heavy keys, even though there were only three keys on the ring.
"Three keys is not excessive," Justice said. "It sounded a little hokey."
When the car continued to stall even after the other keys were removed, the dealership said her daughter, who is 5-foot-3, was sitting too close to the steering wheel and might have bumped the ignition with her knee. Finally, even before GM agreed to a buyback, Jessica Justice stopped driving the Cobalt out of fear and bought a Scion.
GM has said it will not buy back the cars now being recalled, and a spokesman declined to discuss any past buybacks.
In February 2010, NHTSA published its report revealing that when the airbags in Esther Matthews' Cobalt failed, the ignition was in "accessory" mode and the speedometer reading dropped from 47 mph to 0 mph one second before impact. The report noted that Matthews' car had received repairs under a November 2005 airbag recall, but it never directly associated the airbag failure with the ignition position.
GM wasn't aware of the crash when it began the Cobalt recall last month. A spokesman said the company added the two deaths to its tally in late February, when it expanded the recall to include the Ion and five other nameplates.
The airbags might not have been enough to save Matthews and Elliott, both of whom were unbelted. The driver of the Hyundai Sonata that hit them also was killed, even though his airbag worked properly.
Matthews' great-grandson, who was 12 months old at the time and was cut out of the car in his child seat by paramedics, was hospitalized for more than a month and is permanently paralyzed below the waist. But the airbags would not have offered him any additional protection.
Still, the family, who had not heard about the recall until being contacted by Automotive News last week, has always wondered what might have been different if the Cobalt's airbags had worked.
Said Leanne Matthews: "Every time I see a Cobalt, I just cringe."
You can reach Nick Bunkley at email@example.com. -- Follow Nick on