Unless you’ve been living under a rock lately, you’re familiar with the basics of GM’s massive ignition switch recall. This recall (currently affecting 1.6 million cars) has given General Motors a big black eye and has put new GM CEO Mary Barra in the spotlight – for all the wrong reasons. Here’s what you need to know.
Officially, GM issued two recalls affecting approximately 1.6 million vehicles in February and March of 2014.:
- 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.
- The problem: The ignition switch in the recalled vehicles isn’t very sturdy, as even a slight mass on the ignition key can jostle the ignition out of the “run” position. This means a heavy key chain or bump in the road can cause the vehicle ignition to shut off, cutting power to the car. If the ignition is shut off and the vehicle is involved in a subsequent accident, the airbags may not deploy.
- 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.
While the problem outlined above is very serious, the real problem is the timing. Reports are coming out that GM may have known about the issue going all the way back to 2001. It these allegations are true, it means that GM basically hid this problem from buyers until very recently, risking many lives for more than a decade.
There is proof that GM knew about a problem with these switches. First, there are accounts of an internal GM engineering report from 2001 suggesting the ignition switch was too weak. Second, it is believed that GM updated the design of the ignition switch in question in 2005 as a result of dealer reports. However, for reasons that aren’t clear, GM didn’t change over to a new ignition switch design until the 2007 model year. In 2011, when the National Highway Transportation Safety Administration (NHTSA) announced a formal inquiry, GM didn’t announce a recall, nor did they disclose risks or produce information about the scope of the problem. It wasn’t until February 2014 that GM took steps to own and correct this problem.
While there isn’t much good news for GM with this recall, they have been on the forefront in managing this issue. GM’s PR team has been responding to customer’s needs directly and quickly. They have been involved in forums, social media and through the phone/mail to address needs.
GM’s CEO Mary Barra has also been very vocal in addressing the recall. Between herself and her team, they have spoken directly to the media, written OP-EDs, and pledged to cooperate fully with regulators.
The bad for GM is that they almost certainly broke the law. In 2000, Congress passed the Tread Act which mandates manufactures respond in a timely manner to recalls. This act was passed after the Ford Explorer and Bridgestone/Firestone debacle where Ford was found to be lying and withholding information on the safety of the Explorer.
Even if you’re a die-hard GM fan, it’s tough to make the argument that GM responded to these ignition switch problems in a timely manner. This means that GM may be subject to upwards of $35 Million in fines from NHTSA. What’s more, GM execs could be facing criminal charges. While fines are costly, criminal cases have the potential to be far more devastating, as proof of criminal activity would help secure a hefty judgement in a class action lawsuit (which is almost certainly pending – more on that below).
Pretty much everything is ugly for GM with this recall. However, what stands out is that Congress is pissed and they have pledged to investigate. Both the Senate and the House have committees actively looking into GM’s actions. The Department of Justice is also rumored to be considering an investigation, and of course NHTSA has already launched an investigation.
On top of all the investigations are lawsuits that have been filed in several states. It’s rumored that people who have complained on Twitter or Facebook about having this problem with their personal vehicle have been contacted by lawyers seeking claimants for a class-action suit.
Lastly, GM has recently been working hard to restore its public image and improve its quality. This issue could have long lasting effects on their brand. New GM CEO Mary Barra is going to be the public face of GM in the coming weeks and months, and while this fiasco will no doubt raise her profile, it couldn’t have come at a worse time for an executive with just a few months aside.
The reality is that if you hadn’t heard about this issue before, get ready to hear a LOT about it.
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