Need to Know: That Big GM Recall

by Danny Vinik | April 1, 2014

As the first female CEO of a global automaker, Mary Barra already had a spotlight on her, but she and General Motors are now receiving attention for a very different reason: a long-overdue recall on millions of GM cars. Barra, along with David Friedman, the acting administrator of the National Highway Traffic Safety Administration, will testify before a House subcommittee on Tuesday and then a Senate one on Wednesday. Here’s a quick overview of the recall:

What is being recalled, and why?

The American automaker has recalled 2.6 million vehicles in connection with a flaw in the ignition switch that caused it to switch into the “off” position while driving. As a result, drivers would lose steering control and the airbags would not deploy. It has been linked to 13 deaths. As for how this recall ranks all-time, it doesn’t crack the top ten 10. Ford owns the record for largest recall in 2009 with nearly 15 million cars. In fact, GM also owns the third, fifth, seventh and tenth spots on the list. GM has now recalled 6.3 million cars in 2014, more than eight times as many as in all of 2013, for issues such as power steering defect and oil leak.

Why is this recall getting so much attention?

Because GM had known about the ignition-switch issue since 2004, when a customer complaint first prompted a GM engineer to examine the part for a potential defect. Two years later, GM sent a technical service bulletin to dealers detailing the defect and recommended removing heavy keys and objects from key rings. It also gave dealers key inserts to fix the problem if customers complained. No recall was ordered. At the end of 2006, a GM engineer signed off on a change to the ignition switch, produced by the supplier Delphi, that fixed the defect by requiring more torque to move it from the “on” or “off” position.

On May 15, 2009, GM engineers looked at the black boxes—the box that records crash data—of 14 crashes and found that in half, the ignition switch was in the “accessory” position, which allows some battery-powered features like the radio to work. In June, the company filed for bankruptcy. The bankruptcy agreement stipulated that GM would not be liable for accidents before June 10, 2009. All 13 deaths that have been linked to the ignition defect came before that date. GM says it knows of none after it.

In 2012, GM engineers compared the torque in the ignition switch in 44 different vehicles across many makes and models. The majority of vehicles from years 2003 to 2007 had torque performance below GM standards. The following year, GM hired an outside firm to conduct an investigation on the faulty ignition switches and confirmed what the GM engineers had found. In October last year, Delphi, the supplier, reported that it changed the ignition switch in 2006. After meetings over the winter, GM finally announced the recall on February 10 this year and has expanded it multiple times since then.

Where were the federal regulators during all of this?

There are three main ways that the National Highway Traffic Safety Administration investigates an automaker for defects with a particular component: customer complaints, of which the NHTSA receives around 50,000 complaints a year; early warning reporting (EWR), which are quarterly reports that manufacturers are required to send to regulators about any claims filed by customers against automakers that allege death or injury resulted from a vehicle default; special crash investigations, which the NHTSA assigns to one of three outside firms (around 100-125 per year, according to a memo released by the House subcommittee).

The NHTSA conducted special crash investigations of three different fatal crashes of Chevrolet Cobalts in 2005, 2006, and 2009. In all three crashes, the outside investigators determined that the airbags did not deploy and the ignition was in the “accessory” position. In September 2007, after 29 complaints, four fatal crashes and 14 field reports of issues with the ignition switches, the chief of the NHTSA's Defects Assessment Division proposed a full investigation of the “frontal airbag non-deployment in the 2003-2006 Chevrolet Cobalt/Saturn Ion.” Despite that, the NHTSA declined to open a formal investigation in November of 2007, arguing that it could “not identify any discernible trend.” It rejected opening a formal investigation for the same reason in 2010.

Should regulators have done more?

The NHTSA insists it acted appropriately. "NHTSA receives and screens more than 40,000 consumer complaints each year and pursues investigations and recalls wherever our data justifies doing so," it said in a statement. ”Regarding the recent recall of certain GM vehicles, the data available to NHTSA at the time did not contain sufficient evidence of a possible safety defect trend that would warrant the agency opening a formal investigation.”

But others have found fault with the agency. “I think they got an F-minus,” said Joan Claybrook, the former administrator of the NHTSA from 1977 to 1981. She faulted the agency for not opening an investigation into the defect years earlier. “The industry will always say not enough data. ...You don’t need data when there’s a design defect. It is per se defective when the ignition turns off on its own.”

Now what?

Thanks to its bankruptcy agreement, GM isn’t liable for any injuries or deaths before June 10, 2009 unless it committed bankruptcy fraud by not disclosing the defect at the time. That is under investigation. The automaker has admitted that the ignition fault has been linked to 13 deaths, all before that date. Since May 2009, GM has reported 23 fatal crashes to federal regulators under the EWR system, according to the New York Times. The Times investigation found that GM reached confidential settlements in some of those cases, but also pushed back against families in others, even threatening lawsuits against them.

Lawmakers will also investigate whether GM breached the Transportation Recall Enhancement, Accountability and Documentation Act, which requires automakers to submit EWR reports, notify regulators of any recalls in foreign countries within five days of issuance, and sets penalties up to $15 million for violations of NHTSA regulations. Senators have also introduced bills requiring automakers to turn over more information to the NHTSA about safety defects.

As for GM itself, Barra has promised a transparent investigation into the ignition fault. She has created a new position on vehicle safety as well. The cost of the recall is unknown, but could total in the billions of dollars, not including the reputational damage to GM. Expect Barra, in her testimony before the House and Senate subcommittees, to walk the line between limiting that damage and keeping to her promise of full transparency. 

Source URL: http://www.newrepublic.com//article/117224/summary-gm-recall-chevrolet-cobalts-and-other-cars