By on May 22, 2014

GM RenCen Storm Clouds

Detroit Free Press posits the endless recall parade General Motors has been leading since late February 2014 may be doing more harm than good for public perception or its bottom line. Though spokesman Greg Martin claimed the recalls were an effort to make his employer “a first-class safety organization” by focusing hard upon the consumer, a survey by AutoTrader found 51 percent of auto consumers were less confident in the industry’s overall safety record as a result of the actions by GM, up from 44 percent who thought the same five days’ earlier. In addition, the automaker will take a $400 million charge in Q2 2014 for the recalls since April 1 as of this writing, while its current stock price of $33.07 per share is a few cents above its IPO price from November 2010.

Autoblog continues on this thread, proclaiming what GM is doing is the beginning of an industry-wide shift toward issuing full recalls for any flaw in a given product, all under heightened scrutiny from the public and government regulators. For the first months of this year alone, all automakers have recalled a total of 22.4 million vehicles, the bulk of which belong to GM. Kelly Blue Book analyst Akshay Anand says the parade is a double-edge sword, particularly for the General; while such recalls are a sign automakers are being proactive in ensuring their products are as safe as they can be, consumers may perceive the effort as a sign automakers are failing to do their job well in the first place.

Automotive News follows with Fiat Chrysler Automobiles CEO Sergio Marchionne, who stated in a panel discussion at the Brookings Institute this week what else might occur when the GM-led parade becomes a permanent fixture in the industry:

If effectively this frequency of recalls becomes a norm, if everybody starts doing this, then I think you will see this cost being shifted to the consumer. It will transfer itself over onto the selling price of the vehicle.

Marchionne adds automakers, in turn, will act more sensibly in handling potential defects in product, noting punitive actions — such as paying $35 million in fines to the National Highway Traffic Safety Administration — will have little in the way of such handling when reputation is the bigger issue for the industry as a whole.

Speaking of the main parade itself, Autoblog reports 218,000 2004 through 2008 Chevrolet Aveos have been recalled due to the daytime running light module in the instrument panel possibly overheating, melting and setting the vehicle ablaze. According to spokesman Alan Adler, the automaker is “aware of some fires” so far, and is working on a fix for the module. Adler adds that while he doesn’t know when the fix will come, GM will send a second notice to owners when the time comes to schedule repair work.

Detroit Free Press concludes by explaining why GM continues to issue recalls as it combs through its records to avoid another decade-long delay in taking such action:

  • The government has ordered the automaker to meet with the NHTSA monthly on investigations and recalls as part of the former’s $35 million settlement with the latter
  • GM CEO Mary Barra’s appointment of Jeff Boyer to global quality chief — with the mandate to report directly to her if necessary — means anything deemed dangerous or otherwise unknown, including previously unreported defects — are up for attention
  • The automaker’s investors prefer to get the bad news out of the way and accept whatever potential pain awaits in as few quarters as possible, even if no one is happy about swallowing such medicine in the first place

The Freep also provided a list of every recall from January through this week, minus the latest recall issued Wednesday; total recall to date is 18,666,842.

GM

On the sales front, Automotive News reports dealers won’t be able to sell any of the 2009 through 2014 Chevrolet Traverse, Buick Enclave and GMC Acadia crossovers thanks to a stop-sale order issued in a recall involving the front seat belt cable in the vehicles. The order comes during one of the biggest sales weekends of the year, putting a damper on potential Memorial Day promotions. Though dealers could still close on sales without actually allowing the vehicle to leave the lot, no test drives can be carried out in affected demonstrators, making such sales more difficult. GM is offering an end-of-month incentive to maintain May sales momentum, but that may not be enough to offset the extra floorplanning costs if few vehicles can be sold until the affected units are repaired.

Back in the Beltway, Barra met with U.S. Senator Claire McCaskill of Missouri and other members of Congress to discuss recent findings in the February 2014 ignition switch recall. Though spokesman Greg Martin confirmed the meetings did take place, he did not give details on all that was said between Congress and the CEO.

Meanwhile, members of the Obama administration who helped assemble the rescue packages for both Chrysler and GM said they knew nothing about the out-of-spec switch at the heart of the recall maelstrom when said packages were crafted between them and the automaker’s senior execs. One member, Harry Wilson, stated that even if the task force asked GM point-blank about the switch, he doubted they would ever get a straight answer. Lead adviser Steven Rattner added that as far as he knew, the execs before him then didn’t know about the problem; therefore, neither could his task force.

Over in Texas, Bloomberg both GM and supplier Delphi have asked the Texas Supreme Court to combine four suits linked to the switch into one state case. The claim is fighting each one separately would cost the duo time and money, while combining the four and rolling subsequent cases going forward into a single case would “eliminate duplicative discovery, void conflicting pretrial rulings, conserve judicial resources, be more convenient for the parties and witnesses and otherwise promote a more just and efficient conduct of this litigation.” The cases mention involve wrongful injury and death.

With GM’s cadre of lawyers coming under the gun now, Detroit Free Press reports the automaker’s general counsel Michael Millikin has named attorney Lucy Clark Doughtery to advise Boyer and product development chief Mark Reuss. Millikin is also working with independent lawyer Anton Valukas on the internal investigation into why GM handled the recall the way it had. The general counsel’s own future with the company has been called into question, though GM claims Millikin has no “current plans to retire” at this time.

In financial news, Automotive News says GM Financial is preparing to go under its own test of scrutiny of loans originated by its dealership network in an effort to avoid punitive action by the Consumer Financial Protection Bureau based on allegations of discrimination in lending rates among minority consumers. The lender’s chief compliance officer, Dan Bickmore, says his role is to help reorganize the company into compliance with the CFPB, going as far as to establish a new compliance department and boosting the lender’s complaint management process and fair lending areas. He also aims to help educate dealerships on appropriate lending policies to prevent discrimination of protected classes when drafting a loan or lease contract.

On the design front, global design chief Ed Welburn says that with GM’s line of vehicles sharing the same technology and functionality with each other, styling will be needed to help differentiate each unit. He goes on to say the automaker has committed a few design sins in the past, favoring functionality over style and charm, as well as decontenting interiors when a product was overbudget. Welburn concludes that the new guard leading GM “really cares about interiors now, and it shows,” such as the interiors in the 2014 Chevrolet Corvette and Cadillac ELR.

Finally, The Detroit News says the 2015 GMC Sierra All Terrain HD will go on sale this summer. The pickup will be available in 2500 and 3500 weight classes with double and crew cab options, with trim lines to include SLE, SLT and Z71. Power is expected to come from a standard 6-liter gasoline engine, with a twin-turbo Duramax diesel on the options list.

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27 Comments on “Endless GM Recall Parade Sign Of Industry-Wide Action To Come...”


  • avatar
    Detroit-X

    The ignition switch fiasco, the recall parade, are ultimately an unexpected public venue to display GM’s internal dysfunction yet again. As we all know, it has been going on a long time. But when you’re a rising star in that mess, you confuse your own promotions with having done the right thing. Like most of the GM top level, Mary Barra has been at GM 33 years, since age 18. She has no clue what the real world is like. What real business is like. Their priority is to protect and maintain the Old Boy Network first. Customers, suppliers, employees, cars, communities, … are all just a necessary nuisance to that end.

  • avatar
    b787

    Almost the same happened to Toyota in 2010. From having relatively few recalls in years prior unintended acceleration fiasco, to being consistently the most recalled car brand in the US after the fiasco.

    • 0 avatar
      highdesertcat

      You’re right! American-made Toyota products use the same suppliers as GM and are therefore no better and no worse than their American counterparts. Our 2008 Japan-built Highlander hasn’t been recalled for anything, but the American-built ones sure have!

      The difference I see is that Toyota issues recalls at the drop of a hat to protect their long-time, established reputation for quality, durability and reliability.

      GM doesn’t have anything to protect. GM has a rich history of denials, misinfomation, misdirection and obfuscation when it comes to defects in their products, preferring that people prove that a defect exists by being imjured or killed during an accident directly related to the defect.

      So, I believe recalls are good! No matter who issues them, as long as it is before someone gets injured or killed.

      • 0 avatar
        NormSV650

        Not even Japanese made Lexus can survive without recalls:

        http://m.autoblog.com/2014/05/22/toyota-sienna-lexus-gs350-recall/?p=2&icid=art_next

      • 0 avatar
        geozinger

        Still humping the Toyotas, HDC? You do realize that until the unintended acceleration incidents, internal memos from Toyota showed how much money they saved by avoiding recalls due to their government connections, right? In fact, they were rather happy about, as indicated by the internal documents. How many people with sludging engines or bad sliding doors on their minivans were told it was their fault?

        You have to disabuse yourself of the notion that Toyota (or any other automaker) is somehow interested only in your benefit. The only thing they’re interested in is making a profit. Witness the fact that newer Toyotas aren’t built nearly as well as older ones. It’s been discussed quite a bit on this board alone.

        I can’t say that I’m happy about what happened with GM, but their actions are similar to what Toyota went through about four years ago in the wake of the unintended acceleration incidents. Get the known issues attended to; work on re-establishing trust going forward. Time will tell whether it will work, but it appears they are working on a plan to implement substantial change.

        As someone else noted further in the comments, this kind of action will become more common, as all companies will be forced to “up their game” with regards to product safety and reliability. Cars are incredibly complex these days, I’m not surprised there are issues with them. This is not an excuse for bad engineering or cynically timed PR programs, but a realization that a lot of stuff can go wrong with anything this complex.

        • 0 avatar
          highdesertcat

          geozinger, yeah, I became a convert with the purchase of that 2008 Japan-built Highlander. Made me a believer!

          I had been driving (mostly) GM, (Olds and Chevrolet), but also a 2006 F150 up to that point.

          I never owned a pre-American made Toyota product but know several people who did, who don’t want to buy a new Toyota product because of the precipitous drop in quality in Toyota products (as acknowledged by Mr Toyoda himself, before the US Congress).

          The whole Toyota SUA thing turned out to be bogus and sales of Toyota products took off again to reach all-time highs, after the dust had settled.

          Full disclosure here, we’ll be trading my wife’s 2012 Grand Cherokee for a 2015 Sequoia at the end of this year, and I’m looking to trade my 2011 Tundra 5.7 for a 2015 or 2016 Tundra 5.7 4dr 4×4. Along with the 2008 Highlander which my 16 yo grand daughter uses as her daily driver, that will make ours an all-Toyota family.

          These two purchases will likely be the last vehicles we, my wife and I, will buy in our lifetimes.

          The bottom line remains, I believe that recalls are actually good for the customer. But when it comes to MY money, I’d rather trade my money for a Toyota product.

          With a GM product there’s always the chance that I’d have to wait 10 or more years for a recall to happen, and I may not have that long left to live, if a malfunction in a GM vehicle doesn’t kill me before the recall happens.

  • avatar
    Matt Foley

    Maybe the cost of Toyota’s recalls will be “shifted to the consumer.” The cost of GM’s recalls will be shifted to the taxpayer.

    • 0 avatar
      Loki

      They already were. Government doesn’t own anymore of GM, they decided it would be better to sell off the shares and a deep, substantial loss.

      • 0 avatar
        brainy435

        Conveniently sold just before all the recalls started happening, to boot.

        • 0 avatar
          Lorenzo

          Yes. VERY conveniently timed. I doubt the government is trying to make up its loss in fines, but the regulatory agencies might have been told to use a light hand when there was a government stake in GM. Now that there’s no stake, the gloves seem to have been taken off. I was just reminded of a line in Miracle on 34th Street, when Macy’s was wondering if their hired Santa was crazy: “not CRAZY-crazy, like those people in Washington”, or something to that effect. The city and its federal workers/politicians have a reputation of long standing.

  • avatar
    imag

    I think it’s gotten out of control. Cars are complex machines. They are simply not going to be perfect.

    Complex software has bugs. The space shuttle, a machine incorporating some of the most focused engineering reviews in human history, suffered catastrophic failures. A Boeing 777, a machine with one of the best safety records in aeronautical history, still went down – and we still don’t know why.

    Now, automakers are expected to account for every remote possibility for harm while still releasing new models with new features. How is this possible? Where does it end? Toyota was mostly cleared of wrongdoing, but they are still paying billions and adding interlocks everywhere to avoid any appearance that safety might be taking a back, er, seat.

    I agree that we are going to see higher prices as a result. If we will only be satisfied with perfect, then we have to pay for it. Unfortunately, it seems to me that in many of these cases, the only winners are the lawyers and the news media.

    • 0 avatar
      Hummer

      Seeing as how keeping a computer running at peak performance for greater than 6-8 years isn’t without effort, I don’t know how anyone could expect a computer on wheels to go any longer if that.
      Call me old, call me unwilling to accept change call my other wrongly placed names, but after 06, I can’t see the value in the majority of newer vehicles.

      Economy cars are going to be the winner of longevity, less things to go wrong.

      This isn’t to deny GMs wrongdoing, but what I see as a lack of foresight in consumers.

    • 0 avatar

      With all due respect,
      WTF is complex about making an ignition switch w/a key? GM had done it for decades w/no problems,other manufacturers seem to have figured it out.
      Very few of the problems are from pushing the envelope or new technologies.
      Not figuring out seatbelts after they’ve been around for half a century?
      How long have radios,dashes,etc been lighted? And GM can’t make a lighted dash?
      GM lost their focus on the small sh** and this is what’s happening.

      • 0 avatar
        APaGttH

        How difficult is it it design a floor mat?

        A simple relay for a cruise control module? (everyone seems to remember the 10 million + recall of Ford vehicles stretching more than a decade for immolating electrical relays)

        An airbag controller (mass recall of multi-Japanese brands) – airbags have been around since the 70s…

        There are some really stupid recalls again – and the real answer for the GM ignition switch recall was not to hang two pounds of crap from your key in the first place – which is advice that has been around since…well since forever.

        • 0 avatar
          ajla

          Is two pounds actually what GM stated was the weight level where the ignitions were failing or did you just pull that number out of the sky in an attempt to blame buyers when a company approved an underspec’d part for production?

  • avatar
    brettc

    Wow, I’m baffled by the Aveo DRL module thing. GM has been putting DRLs on its cars since the early 90s, so they shouldn’t have problems like that. That’s one of the few things I commend GM for doing, along with ABS in the 90s. As a result other manufacturers have started doing it and selling it as a safety feature. Maybe they saved a penny per unit or something by going with the fire-hazard part. And a stop order on their popular CUVs? Not good.

    I think GM is going to feel the effects from their recall bonanza for a while. Toyota was affected for a little while, but people generally equate Toyota with high quality cars even if they’re now building things comparable to late 90s/early 2000s Hyundais.

    I have equated GM products as garbage ever since my parents had their horrific ’87 Celebrity. Since the bankruptcy occurred and they apparently woke up I started to think they were building better stuff and even drove and seriously considered a Chevy Cruze. But with all of the recalls, GM is back to being a purveyor of $hitmobiles in my head. I’m pretty sure I’m not the only one who thinks this way at the moment.

    So it will be fascinating to see how this plays out in the next 1 to 2 years. As someone said yesterday, the GM Deathwatch should probably be brought back. With massive recalls and channel stuffing reportedly ramping up again, it seems like things are going to get messy again.

    • 0 avatar
      ellomdian

      Eh, it will be a painful 2 quarters, and the annuals will almost certainly be down. But Death-watch? That seems a little drastic.

    • 0 avatar
      Kyree S. Williams

      Not the add fuel to the flames, but you can find a disproportionate amount of GMT800 and GMT900 examples driving around with one burnt-out DRL, and it is a known issue with these cars…

      • 0 avatar
        APaGttH

        As a former GMT800 owner – the burned out DRL issue is the stock bulbs used S-U-C-K.

        As an active member of the Avalanche community swapping out to the 3157NA LL bulbs results in the DRLs running…well…like they should of.

        The OEM light bulb was utter crap.

    • 0 avatar
      Thatkat09

      Two things
      Theres nothing to actually back up the claims of channel stuffing.
      Noway in heck GM dies from this, no need to start any deathwatch.

  • avatar
    harshciygar

    Did I just miss it, or is there no mention of the fact that automakers are also using more globalized platforms with increased part sharing.

    It is not inconceivable of to imagine a single important but faulty part forcing an automaker to recall just about every model in its lineup.

  • avatar
    rpol35

    ‘Though spokesman Greg Martin claimed the recalls were an effort to make his employer “a first-class safety organization”’

    Talk about polishing a turd; trying to avoid another $35 MM NHTSA fine is what’s driving the recalls.

  • avatar
    Big Al from Oz

    GM would have done a risk assessment on how to manage these types of issues.

    They didn’t have the money to rectify the problem since the GFC and I do believe the US government who was a shareholder knew about this.

    Why did this stuff surface after the fact, ie, after the sale of the US governments stake?

    I hope GM is eventually sold and new management that understand the definition of integrity and sincerity are put into place.

    I do think GM would have been a much stronger company without the UAW, US government, and existing management structure.

    What I just stated is that GM must try and survive on it’s own and if it sinks sell it to the highest bidder.

  • avatar
    philadlj

    You can probably get a survey to find 51% of people dislike the taste of cough syrup…but it still loosen mucus and makes coughs more productive.

    In other words, the industry needs to take its medicine: if it built cars with flaws, those flaws have to be corrected, before, not after people die.

  • avatar
    CapVandal

    General Electric and General Motors are the two largest employers among manufacturing companies in America. They employ a lot less people than Walmart, Yum, and McDonalds which are our three largest employers.

    No industrialized country would let its largest auto manufacturer be liquidated in the middle of a global financial crisis. I don’t recall Hyundai going down in the Asian Meltdown. And Japan has been on the skids for over a decade without their large manufacturers going bankrupt let alone liquidated.

    The biggest mistake was not renaming General Motors after the bankruptcy. Just to give the public a clue that it went through bankruptcy and was recapitalized by private investors. The fact the government lost about 10 billion or less than 20% of their total support was due to the timing of the sale — and it could have gone either way. TARP, which financed the Bank and Auto rescues made money overall — and more than recouped its losses on GM with gains from the large banks.

    Germany fights for its industrial jobs tooth and nail, and would never let Mercedes, BMW or Volkswagen go through anything as tough as the US bankruptcy. Same with Japan and Korea.

    Seems like GM has negative brand equity now… Like the majority of people won’t be happy with ANY outcome. If it goes broke, it means the US should have let it go broke in the middle of a severe recession. If it succeeds,it is only because of socialistic government interference. If we had liquidated it in the middle of the meltdown and the carcass had been devoured by hedge funds and another 1/2 million jobs had been lost — well that would be GM’s fault also.

    And if they don’t recall cars for any defect now, they will be considered criminals like Toyota (and fined $1 billion), and if they do, people will talk about the awful current quality. There is simply no outcome that will please a large chunk of the population.

    Since there is global auto overcapacity, I would prefer to see non American firms taking the first bullet. If Non GM (post bankruptcy) has solvency issues when our economy is close to normal, then sure — shut it down and let the hedge funds go Medieval on its sorry ass. Hedge funds have had a few bad years and need to do some deals.

  • avatar
    Dimwit

    One of the big issues is the relationship between GM and their parts suppliers. All 3 of the domestics are aggressive in squeezing the last bit of cost out of the supply chain. It’s a very adversarial relationship and these are the fruits of that sort of deal. It’s going to keep happening until they can get on the same page. Frankly, I don’t see that as realistic.


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