The latest development in the GM ignition recall fiasc
Automotive News reports Barra recorded and released five short videos for GM’s YouTube channel in an ongoing attempt to minimize the damage to her company’s reputation in the court of public opinion. The overall message of the videos is that the public is the automaker’s compass, and GM will develop “a world class process” of vehicle safety evaluation so that nothing resembling the current crisis occurs in the future.
However, Bloomberg says this trial by fire is only the beginning for Barra’s tenure as GM’s CEO. Slow sales in the United States due to harsh winter weather at the start of the year, mitigating losses in Europe, restructuring of global operations in Australia and South Korea, and currency challenges in Russia and South America all have made their impact on GM’s stock value, falling 14 percent since Barra took the reins in mid-January 2014. She also must contend with Volkswagen — who knocked GM down to third in the Big Global Three trio last year — by maintaining or increasing pace in China against the Germans by as much as 10 percent.
Over in Washington, D.C., safety advocates have found the NHTSA lacks the resources needed to properly investigate provided data that could lead to a prompt recall, just as Congress has done all they could to strengthen the agency via the 2000 TREAD Act established in the wake of the 2000 Firestone-Ford recall case.
Currently, the NHTSA’s Office of Defect Investigations saw their numbers fall from 62 to 51 investigators over the years, and operates on an annual budget of $10 million since 2005. Meanwhile, the number of registered vehicles increased to 248 million in the same time, a number proving difficult to monitor — resulting in the recall crises experienced by Toyota and GM — as Advocates for Highway and Auto Safety president Jackie Gillan explains:
The idea of $10 million for an office that’s in charge of the safety of all these vehicles, undertaking investigations and doing the recalls, it’s just ridiculous. You look at the number of people working on this, you look at their inadequate funding, and you think to yourself, no wonder this is happening over and over again.
For their part, NHTSA spokesman Nathan Taylor defended his agency’s record, citing 929 recalls involving over 55 million vehicles in the last seven years as a result of their investigations. In addition, he says automakers paid a total of over $85 million in fines over delays, and notes fatalities related to defects are at an historic low. However, Taylor believes the process could be improved:
[The agency] pursues investigations and recalls wherever our data justifies doing so. NHTSA is constantly looking for ways to improve our process so we can better identify serious safety defects.
On the lawsuit front, Charles and Grace Silvas of Texas have asked U.S. District Judge Nelva Gonzales Ramos to force GM to issue a “park it now” warning to all affected owners not to drive their vehicles until the ignition switch is fixed. The possible class action suit — which could net up to $10 billion in damages — was filed not due to any fatalities experienced by the Silvas, but because the defect’s concealment led to lost resale value.
USA Today reports that Barclays analyst Brian Johnson is predicting that GM will create a settlement fund between $1 billion and $1.5 billion for affected customers, on top of banking $1 billion to pay the potentially sizable fine issued by the U.S. federal government when all is said and done. Johnson says the funds could be funneled through “Old GM,” which would maintain the wall protecting “New GM” from pre-bankruptcy liabilities.
One major headache for dealers and independent parts stores will be sifting through the spare parts room to find which ignition is the improved part, and which one is the defective unit. The problem comes from both sharing the same part numbers — GM 10392423 and Delphi D14611 — a move that is considered to be counter to standard operating procedure when fixing a defective part.
For repair shops, this means the only way to tell which part is which — outside of possessing forensic engineering tools — is by disassembling every single ignition related to the recall.
The second issue: Finding enough loaner vehicles for every affected customer. Thus far, GM received 9,000 requests for such vehicles, but despite calling upon rental companies such as Enterprise and Hertz for backup, dealers are having a hard time placing customers in loaners, including Kolar Chevrolet general manager Dwayne Haapanen:
There’s been a bit of a struggle finding the cars. I burned up all my loaner fleet, and we’ve been renting from Enterprise — and now they are out of cars.
Consumers are also having a hard time obtaining a loaner, though quantity isn’t the only issue. GM’s hotline for recall questions and loaner requests has seen long waits for callers, as well as a lack of thorough training for those manning the phones, sometimes leading to request denials. The automaker is adding staffing and improving training to alleviate the problems.