The Truth About Cars » Delphi http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Sun, 19 Oct 2014 11:58:25 +0000 en-US hourly 1 http://wordpress.org/?v=4.0 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars editors@ttac.com editors@ttac.com (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Delphi http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com Delphi Confirmed ITS Technology Supplier For Cadillac http://www.thetruthaboutcars.com/2014/09/delphi-confirmed-technology-supplier-cadillac/ http://www.thetruthaboutcars.com/2014/09/delphi-confirmed-technology-supplier-cadillac/#comments Fri, 12 Sep 2014 13:00:57 +0000 http://www.thetruthaboutcars.com/?p=911090 Earlier this week, General Motors CEO Mary Barra announced that Cadillac would be the first of her company’s brands to receive V2V and V2I technologies, which would be introduced in the 2017 CTS and the unnamed F-segment flagship recently green-lighted. Today, we know who will be supplying those technologies: supplier Delphi. Just-Auto reports the supplier […]

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Delphi HQ Sign

Earlier this week, General Motors CEO Mary Barra announced that Cadillac would be the first of her company’s brands to receive V2V and V2I technologies, which would be introduced in the 2017 CTS and the unnamed F-segment flagship recently green-lighted.

Today, we know who will be supplying those technologies: supplier Delphi.

Just-Auto reports the supplier would be the first off the line in delivering intelligent transport systems, building upon the vision and radar systems already found in the marketplace. The supplier claims output of its ITS technology is “highly flexible,” and can be configured in numerous ways to suit the customer’s preferences.

As for when production will commence, Delphi says the first packages will leave the floor in 2016 for North American markets.

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Did Obama Administration Help Delphi Evade U.S. Taxes? http://www.thetruthaboutcars.com/2014/08/obama-administration-help-delphi-evade-u-s-taxes/ http://www.thetruthaboutcars.com/2014/08/obama-administration-help-delphi-evade-u-s-taxes/#comments Wed, 06 Aug 2014 23:01:57 +0000 http://www.thetruthaboutcars.com/?p=883441 From Bloomberg’s Zachary Mider comes a new allegation regarding the restructuring of (formerly) American parts maker Delphi: the Treasury Department under Obama helped the company re-incorporate in England as part of a tax avoidance strategy. If that’s true, it’s an embarrassing revelation for a President who recently condemned American companies that incorporate abroad as “corporate […]

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Delphi-Logo

From Bloomberg’s Zachary Mider comes a new allegation regarding the restructuring of (formerly) American parts maker Delphi: the Treasury Department under Obama helped the company re-incorporate in England as part of a tax avoidance strategy. If that’s true, it’s an embarrassing revelation for a President who recently condemned American companies that incorporate abroad as “corporate deserters.” Like many things in the financial world, however, appearances are often deceiving.

As Mider explains, Delphi was spun off from GM in 1999 in an attempt to diversify the part’s division’s clientele and make it more globally competitive. The move didn’t pan out; by 2005 Delphi was in bankruptcy court, where it scraped along until the 2009 financial crisis. The Great Recession made Delphi’s situation acute; if GM collapsed, the parts company had no hope of surviving. Conversely, GM needed the company to keep supplying it with crucial parts. After the bailout package for GM was approved in the waning days of the Bush Administration, Treasury officials understood that Delphi would need to be recapitalized as well. Steven Rattner, the Wall Streeter appointed by President Obama to oversee the bailout of GM, helped broker a deal to “fix” Delphi by getting the company out of bankruptcy court.

Initially, the hedge fund Platinum Equity LLC of Los Angeles agreed to divvy up Delphi’s assets with GM, with the newly Treasury-backed carmaker providing the majority of the financing (Treasury money) for the deal. However, the agreement with Platinum fell through when another one of Delphi’s creditors, the hedge fund Elliot Management, objected to the terms of the deal. Elliot and the firm Silver Point Capital partnered to put together their own bid for Delphi, which GM agreed to. GM invested $1.7 billion into Delphi’s equity, and bought out its steering parts business and a few factories for a further $1.1 billion. All of this money came from an escrow account filled with $16 billion in bailout money set up after GM emerged from bankruptcy, and all the spending required Treasury Department approval before it could go forward. There was one small catch in the fine print of the deal: GM and the hedge funds would reincorporate Delphi in some foreign country, ostensibly to obtain a better tax position. Mider explains that this practice, known as “inversion,” is becoming increasingly common amongst U.S.-based companies seeking a more favorable tax climate. Delphi was incorporated in England for that purpose, and the money was disbursed from the Treasury escrow account after the reincorporation was complete. The original agreement with Platinum didn’t contain language about foreign reincorporation, although it later emerged that the fund’s lawyers had set up two paper companies in Luxembourg for that purpose.

The deal between Elliot, Silver Point, and GM to rescue Delphi turned out to be a great investment for all parties involved. After Delphi went public again in 2011, the stock price surged. GM sold its stake back to Delphi for a $1.6 billion profit, and Elliot Management booked $1.3 billion on an initial investment of $300 million. At this point, GM was under no obligation to pay the Treasury anything. The terms of the bankruptcy meant that all of the Treasury’s debt had been swapped for equity in the “new” carmaker. The U.S. Government wouldn’t see a dime of GM’s profits from the Delphi deal, besides any increase in the market value of its equity stake. And it had been cut out of a large chunk of the tax revenue from Delphi, which was now headquartered in England under more favorable rules.

The question becomes who knew what, when, and how much leverage the Treasury had to exert on the terms of the deal with Elliot and Silver Point. The time window for the agreement is key. GM’s bankruptcy proceedings concluded on July 10, 2009. Steven Rattner and the rest of the bailout task force stepped aside, believing their jobs were finished. But the collapse of the Platinum deal happened soon afterwards, because some of Delphi’s creditors weren’t satisfied with the terms. The deal between Elliot, Silver Point, and GM was inked on July 26. When interviewed by Bloomberg, Rattner claimed to have no knowledge of any plan to incorporate Delphi in a foreign locale at the time of the original negotiations. Even if he had, it’s not likely that he would have been able to stop it. Because the Treasury never technically held a direct stake in Delphi (unlike its assumption of equity in GM’s case), it was only an indirect party to the final settlement of Delphi’s bankruptcy proceedings. Rattner had denied a $150 million cash infusion from GM to Delphi previously, when it became clear that transfer wouldn’t end Delphi’s bankruptcy proceedings. The Treasury could have rejected disbursement of funds for GM’s investment in the parts maker after the reincorporation of Delphi in England. But that would have iced the deal and put Delphi’s future in jeopardy, which in turn would have been counterproductive to the purpose of the bailout in the first place. Even so, it’s not a proud moment in the management of the bailout by any stretch of the imagination.

The other factor to consider is that Rattner and the bailout task force may have believed that Delphi’s reincorporation wouldn’t affect its tax position after all. Mider reports that in September of 2009, the IRS notified Delphi that it was still considered a U.S. company and would be subject to U.S. corporate income tax rates. As a justification, the IRS cited a 2004 law meant to prevent exactly what Delphi had done: the creation of paper “surrogate foreign corporations” for the purposes of evading taxes. The IRS dispute with Delphi in this case is ongoing. If the company loses its appeal, it would owe about 20 percent more a year in taxes than it pays now (as well as any assessments for back taxes). If that’s the case, then the “inversion” of Delphi will be a moot point.

The broader takeaway from the whole saga is that any intervention by government in the spaces normally served by private equity is bound to have some unpleasant side effects. Simultaneously trying to manage, regulate, and tax a business is bound to produce more than a few conflicts of interest. At the very least, the Delphi deal embarrasses an Administration which has recently sought to turn up the heat on companies moving their headquarters abroad. It’s unlikely to change many minds about the wisdom of the bailout; those lines were drawn firmly some time ago. But the curious case of Delphi’s “inversion” will undoubtedly be cited in future debates about corporate tax reform in America, from both a left and a right-wing perspective.

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Barra Defends GM Top Lawyer In Second US Senate Hearing http://www.thetruthaboutcars.com/2014/07/barra-defends-gm-top-lawyer-in-second-us-senate-hearing/ http://www.thetruthaboutcars.com/2014/07/barra-defends-gm-top-lawyer-in-second-us-senate-hearing/#comments Fri, 18 Jul 2014 11:00:35 +0000 http://www.thetruthaboutcars.com/?p=869290 Under fire from the U.S. Senate Commerce Committee for not having fired General Motors’ top counsel Michael Millikin, CEO Mary Barra defended her decision to keep him on the company payroll during Thursday’s hearing over the February 2014 ignition recall crisis. Automotive News reports Barra believed Millikin, who has served as GM’s general counsel since […]

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General Motors CEO Mary Barra Testifies Before Senate Committee About GM's Recalls

Under fire from the U.S. Senate Commerce Committee for not having fired General Motors’ top counsel Michael Millikin, CEO Mary Barra defended her decision to keep him on the company payroll during Thursday’s hearing over the February 2014 ignition recall crisis.

Automotive News reports Barra believed Millikin, who has served as GM’s general counsel since 2009, to be “a man of incredibly high integrity” in spite of a number of his charges failing him and the automaker, five of whom were among the 15 let go from the company last month as a result of the Valukas report.

For his part, Millikin testified that he has enacted a number of changes into how his department functions, including bringing in an outside firm to review the automaker’s litigation practices, as well as bringing to his attention any lawsuits linked to a death and/or injury as a result of GM’s products. Millikin also claimed he was not aware of the issues surrounding the out-of-spec ignition switch until the February 2014 recall was issued.

Other highlights in today’s hearing include the testimony of GM supplier Delphi CEO Rodney O’Neal, proclaiming that said switch, despite being out-of-spec, “met the requirements” put forth by the automaker; Kenneth Feinberg’s testimony, where he explained to the Senate committee how he would help affected consumers find the proof needed to process a claim, as well as stating the list of eligible vehicles under the Feinberg plan was one of the few parts of the plan decided upon by GM; and consumer advocate Ralph Nader calling upon the automaker to bring aboard an independent ombudsman who could serve as a firewall from retribution for employees wanting to blow the whistle on a potential problem, then report the problems to the CEO.

The Senate committee will hold a separate hearing with the National Highway Traffic Safety Administration over their part of the February 2014 GM ignition recall, though no date has been given thus far.

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Delphi “Not A Target” Of DOJ Investigation http://www.thetruthaboutcars.com/2014/07/delphi-not-a-target-of-doj-investigation/ http://www.thetruthaboutcars.com/2014/07/delphi-not-a-target-of-doj-investigation/#comments Tue, 15 Jul 2014 13:00:42 +0000 http://www.thetruthaboutcars.com/?p=866378 Though under investigation by the Internal Revenue Service over abode issues, Delphi says it is not under investigation by the U.S. Department of Justice over its part of the February 2014 General Motors ignition recall. The Detroit News reports representative Claudia Tapia confirmed a report by Reuters that her employer is “not a target,” but […]

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Delphi HQ Sign

Though under investigation by the Internal Revenue Service over abode issues, Delphi says it is not under investigation by the U.S. Department of Justice over its part of the February 2014 General Motors ignition recall.

The Detroit News reports representative Claudia Tapia confirmed a report by Reuters that her employer is “not a target,” but a witness in the affair. Like GM, the supplier has been subpoenaed by the U.S. Attorney’s Office in Manhattan, the office aided by a federal grand jury. Delphi has also turned over documents to the U.S. House Energy and Commerce Committee as part of the latter’s own inquiry into what went wrong and when regarding the ignition switch linked to 13 fatalities, 54 accidents and 2.6 million recalled vehicles.

Later this week, Delphi CEO Rodney O’Neal will appear with GM CEO Mary Barra before the U.S. Senate Commerce Committee in a second round of hearings; the committee also sent the supplier a detailed questionnaire about its role.

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General Motors Digest: June 30, 2014 http://www.thetruthaboutcars.com/2014/06/general-motors-digest-june-30-2014/ http://www.thetruthaboutcars.com/2014/06/general-motors-digest-june-30-2014/#comments Mon, 30 Jun 2014 13:00:14 +0000 http://www.thetruthaboutcars.com/?p=855849 In today’s General Motors digest: GM recalls over 700,000 units globally; Siemens VDO Automotive urged the automaker to look into airbag data in 2004; product chief Doug Parks was aware of the ignition problems in 2005; Feinberg compensation plan will have no payment cap; and Delphi is under the gun from both Congress and the […]

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GM Renaissance Center

In today’s General Motors digest: GM recalls over 700,000 units globally; Siemens VDO Automotive urged the automaker to look into airbag data in 2004; product chief Doug Parks was aware of the ignition problems in 2005; Feinberg compensation plan will have no payment cap; and Delphi is under the gun from both Congress and the IRS.

Autoblog and The Detroit News report the following vehicles are under recall:

  • 2013 – 2014 Chevrolet Cruze: Takata airbag inflator defect; 29,019 (U.S.), 4,066 (Canada)
  • 2014 – 2015 Chevrolet Silverado/GMC Sierra; 2015 Chevrolet Tahoe, Surburban/GMC Yukon, Yukon XL: Transfer case electronically switching to neutral without driver input; 392,459 (U.S.), 53,607 (Canada), 20,874 (Other Markets)
  • 2013 – 2014 Chevrolet Caprice, SS: Potential for windshield wiper motor gear teeth to become stripped; 4,794 (U.S.)
  • 2014 Chevrolet Corvette: Insufficient welding in rear shocks of FE1, FE3 suspension-equipped vehicles; 1,939 (U.S.), 33 (Canada), 82 (Other Markets)
  • 2009 – 2012 Buick Excelle GT: Potential for high-beams to remain on under extreme circumstances; 194,107 (China)

Automotive News says in 2004, Siemens VDO Automotive engineer Douglas McConnell wrote a report urging GM to look into a possible link between airbag sensors and the loss of power via the ignition cycle. The GM-commissioned report was penned a month before the first Chevrolet Cobalts left the assembly line, and shown to five engineers working for the automaker at the time, including Matthew Craig, who currently works for the National Highway Traffic Safety Administration as its chief of human injury research. Declining to elaborate on the report, representative Greg Martin stated “there were several missed opportunities for GM to properly identify the problem,” citing the Valukas report to back his statement.

Meanwhile, Bloomberg reports that Doug Parks, appointed to the post of vice president of global product programs by CEO Mary Barra, was a vehicle chief engineer for the Chevrolet Cobalt program in 2005. In that role, he was a part of the cost debate over whether or not to redesign the ignition switch that would be put into the compact, stating in a May 2005 email that changing the design “appears to be the only real, quick solution.” Parks had been invited to attend two meetings in the first half of 2005 over the issue, though nothing could be determined as far as attendance was concerned.

In the present, Kenneth Feinberg’s compensation program for those injured or killed as a result of the ignition switch will pay claims to all drivers, passengers and bystanders involved in an accident with an affected GM vehicle. Further, claimants will have few hurdles to go through in being paid, including alcohol use and lack of physical evidence. Finally, the program will have no cap on the amount of money paid in total, though no word has been given by Feinberg and his time about how much will be paid per victim and their families. Claims will be accepted beginning August 1.

Finally, Automotive News reports Delphi, already under investigation by the U.S. House Energy and Commerce Committee over its part of the February 2014 ignition switch recall, is now under the gun from the Internal Revenue Service over whether or not the supplier can be taxed as a domestic corporation. Upon emerging from bankruptcy in 2009, Delphi set up its tax base in the United Kingdom, though it retained its headquarters and executive team in Troy, Mich. Should the supplier lose its appeal with the IRS, its tax rate could rise to 22 percent effective rate, up from the 17 percent Delphi pays currently. In 2013, it paid $256 million in taxes; under the new rate, an additional $75 million would need to be paid, bringing the total to approximately $331.3 million.

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General Motors Digest: June 27, 2014 http://www.thetruthaboutcars.com/2014/06/general-motors-digest-june-27-2014/ http://www.thetruthaboutcars.com/2014/06/general-motors-digest-june-27-2014/#comments Fri, 27 Jun 2014 13:00:34 +0000 http://www.thetruthaboutcars.com/?p=854625 In today’s General Motors digest: The automaker rescinds its stop-sale of 33,000 Chevrolet Cruzes over Takata air bag issues, recalls 29,019; Delphi turns over documents to a federal grand jury; Kenneth Feinberg’s compensation plan will be revealed Monday; and CEO Mary Barra says more recalls may be coming, but no more people will be fired […]

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Mary Barra at 2014 Detroit Auto Show

In today’s General Motors digest: The automaker rescinds its stop-sale of 33,000 Chevrolet Cruzes over Takata air bag issues, recalls 29,019; Delphi turns over documents to a federal grand jury; Kenneth Feinberg’s compensation plan will be revealed Monday; and CEO Mary Barra says more recalls may be coming, but no more people will be fired as a result of the Valukas report.

Automotive News reports GM lifted its stop-sale order of 33,000 2013 – 2014 Chevrolet Cruzes due to a defective airbag inflator found in units provided by supplier Takata once the automaker accounted for all the affected vehicles by comparing VINs to the parts list. Detroit Free Press adds GM then recalled the affected units, totaling 29,019, all of them still under its new vehicle warranty. The defect, if not treated, could result in the inflator — and the airbag unit overall — catastrophically exploding or non-deployment of the airbag in an accident.

Speaking of suppliers, The Detroit News says Delphi delivered hundreds of documents related to its part of the February 2014 ignition switch recall to the U.S. Justice Department via grand jury subpoena. The supplier also sought confidential treatment in turning over the requested documents. Meanwhile, the U.S. House Energy and Commerce Committee made public 80 emails and other documents by the automaker and the supplier illustrating GM’s struggles with the ignition switch, painting “a disturbing and devastating picture, a beyond-worst-case systemic breakdown that led to lives needlessly lost,” according to U.S. Representatives Tim Murphy of Pennsylvania and Fred Upton of Michigan.

Automotive News reports Kenneth Feinberg, the victim-compensation expert hired by GM to compensate victims of the defective ignition switch, will announce his plan Monday at 10 a.m. in Washington, D.C. Though no dollar amount will likely be pegged in the announcement, the terms of the plan could sway victims into accepting compensation over filing a lawsuit against GM. The automaker did not provide its own estimate, as well.

Finally, Reuters reports CEO Mary Barra said during an interview with Matt Lauer on NBC’s “The Today Show” that more recalls could come down the pike, based on data received. She also commented on the Feinberg plan, stating her company wants “every single person who either lost a loved one or has a serious physical injury to be a part of that program.” Detroit Free Press adds that when Lauer asked if there would be more firings linked to the ignition switch, Barra proclaimed everyone who would be let go has been let go. She emphasized that the “silos of information” that obfuscated the issue were being torn down, with employees taking notes during safety meetings that are then presented to her for review.

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GM Offers Incentives To Speed Up Ignition Recall Repairs http://www.thetruthaboutcars.com/2014/06/gm-offers-incentives-to-speed-up-ignition-recall-repairs/ http://www.thetruthaboutcars.com/2014/06/gm-offers-incentives-to-speed-up-ignition-recall-repairs/#comments Mon, 23 Jun 2014 10:00:02 +0000 http://www.thetruthaboutcars.com/?p=850106 With 2.6 million vehicles needing new ignition switches fueling service bay backlogs, General Motors is offering its dealership network incentives to speed up the process. Automotive News reports dealership service and parts managers who install 90 percent or more of the ignition-switch replacement kits by July 7 will receive a $250 credit for use at […]

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ChevyDealership03.jpg

With 2.6 million vehicles needing new ignition switches fueling service bay backlogs, General Motors is offering its dealership network incentives to speed up the process.

Automotive News reports dealership service and parts managers who install 90 percent or more of the ignition-switch replacement kits by July 7 will receive a $250 credit for use at an unnamed online gift shop. The credit carrot/stick combo is part of GM’s Ignition Switch Recall Completion Initiative, which will also offer $4,000 in credit to 50 qualifying dealerships chosen at random, while one dealership will receive $10,000; both credit incentives are meant to be split between service and parts managers.

Meanwhile, 199,457 vehicles have undergone the 70-minute surgery through June 16 according to the automaker, while 400,000 kits have arrived at dealership service bays thus far. GM holds that enough kits will be made to repair the majority of the affected vehicles by October. Customers will also receive new keys to go with the new switches.

Made in supplier Delphi’s plant in Mexico, the kits can also be applied to vehicles other than the ones they were meant to fix, but only if the affected customers aren’t able to have their vehicle repaired “in a reasonable time.” To ensure customers don’t miss out, GM will also conduct an outreach program via email in the next few weeks to those who haven’t begun the process of repairing their affected vehicles.

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Barra Returns To Face Congress Post-Valukas Report http://www.thetruthaboutcars.com/2014/06/barra-returns-to-face-congress-post-valukas-report/ http://www.thetruthaboutcars.com/2014/06/barra-returns-to-face-congress-post-valukas-report/#comments Thu, 19 Jun 2014 10:00:26 +0000 http://www.thetruthaboutcars.com/?p=846857 In today’s digest: General Motors CEO Mary Barra returns to the Beltway with Anton Valukas in tow; GM is hit with a $10 billion lawsuit; affected families appear before Barra’s testimony; and a safety group calls the Valukas report “flawed.” Automotive News reports Barra made good on her promise to return to Capitol Hill for […]

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Barra and Valukas are sworn in before House Energy and Commerce Oversight and Investigations Subcommittee hearing on Capitol Hill

In today’s digest: General Motors CEO Mary Barra returns to the Beltway with Anton Valukas in tow; GM is hit with a $10 billion lawsuit; affected families appear before Barra’s testimony; and a safety group calls the Valukas report “flawed.”

Automotive News reports Barra made good on her promise to return to Capitol Hill for a second round of Congressional hearings over the February 2014 ignition switch recall that has upended the automaker for the time being. During Wednesday’s hearing before the U.S. House Energy and Commerce Committee, she proclaimed any unexpected vehicle shutdown to now be considered a safety concern by the automaker, instead of waiting until a clear link surfaced on its own prior to action. The hearing also revealed just how much more work awaits GM in overhauling its corporate culture for the better of all, recounting a report made by an employee in 2005 about ignition switch issues in the 2006 Chevrolet Impala similar to those in the Cobalt. However, it would take until this week for a “big recall” of the mid-size sedan over the issue to occur due to the company’s widespread safety deficiencies.

Later in the hearing, former U.S. attorney Anton Valukas, hired by GM to conduct an independent internal investigation into the recall, took questions about his report. Valukas stated that while he had unfettered access to the automaker, getting through to supplier Delphi and trial lawyers leading cases against GM was easier said than done. Barra then had words about Ray DeGiorgio, the former GM engineer named repeatedly in the Valukas report for his approval of the original switch and its undocumented redesign. In short, she didn’t find DeGiorgio “credible” regarding his statements to Valukas’ team of investigators.

Finally, Barra addressed the issue of compensation for the families affected by the original recall, stating victim-compensation expert Kenneth Feinberg would have total control of the fund, and that GM will have no cap on compensation:

We want to capture every single person who suffered serious injury or lost a loved one — every single one. If the ignition switch was part of the issue, we want them in the program. We want to get everybody that’s affected.

Reuters reports GM is now under the gun of a $10 billion lawsuit filed by Hagens Berman Sobal Shapiro in federal court in Riverside, Calif. on behalf of Anna Andrews. The lawsuit calls for compensation due to lost resale value for those who owned or leased a GM vehicle between July 10, 2009 and April 1, 2014; Andrews herself claimed she would have not purchased her used 2010 Buick LaCrosse — or would have opted for a lower price — “had GM done a better job of disclosing vehicle defects.” Should all come to pass, some 15 million GM customers would receive damages whether their vehicles were recalled or not.

Detroit Free Press says the families affected by the defective switch at the heart of the February 2014 recall made an appearance alongside U.S. Senator Richard Blumenthal of Connecticut prior to Wednesday’s hearing to help others who may have been harmed by products not under recall, and to call for quicker issuing of recalls of flawed vehicles. The families shared stories of how GM’s negligence destroyed the lives of not only those behind the wheel of the vehicles with the defect, but their lives as well. Blumenthal added that “the victims who settled should be given the opportunity to recontest their claims.”

Finally, Center for Auto Safety director Clarence Ditlow penned a letter to Valukas, stating the attorney had accepted the automaker’s defense “that its engineers and senior managers did not know” stalling in vehicles was a major safety issue, to the detriment of his report. He added that the Valukas report had omitted or missed evidence “in constructing what amounts to a corporate defense against criminal charges… that show GM at its highest levels of management considers stalling to be a safety defect.” The report said officials did not consider stalling issues in the Cobalt or Saturn Ion as a hazard until the issue was linked to the failed deployment of air bags due to a loss of power prior to an accident.

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GM Recalls 3.36M Vehicles Over Ignition Problem http://www.thetruthaboutcars.com/2014/06/gm-recalls-3-36m-vehicles-over-ignition-problem/ http://www.thetruthaboutcars.com/2014/06/gm-recalls-3-36m-vehicles-over-ignition-problem/#comments Tue, 17 Jun 2014 10:00:55 +0000 http://www.thetruthaboutcars.com/?p=845449 In today’s digest: General Motors issues another ignition-related recall; has fixed a handful of those affected by the original ignition recall; and unveils plans for three new compacts to be sold in emerging markets. Autoblog reports GM has issued six total recalls of some 3.41 million North American vehicles built between the start of the […]

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GM-building-US-Flag

In today’s digest: General Motors issues another ignition-related recall; has fixed a handful of those affected by the original ignition recall; and unveils plans for three new compacts to be sold in emerging markets.

Autoblog reports GM has issued six total recalls of some 3.41 million North American vehicles built between the start of the new century and the present:

  • 2000 – 2005 Cadillac Deville; 2004 – 2005 Buick Regal LS, GS; 2004 – 2011 Cadillac DTS; 2005 – 2009 Buick Lacrosse; 2006 – 2008 Chevrolet Monte Carlo; 2006 – 2011 Buick Lucerne; 2006 – 2014 Chevrolet Impala: Ignition switch; 3.36 million recalled
  • 2013 – 2014 Cadillac ATS; 2014 Cadillac CTS: Shift cable/bracket separation in automatic transmissions; 68,887 recalled
  • 2015 Chevrolet Silverado 2500/3500 HD; 2015 GMC Sierra 2500/3500 HD: Potential poor connection of power steering hose clamp connection to power steering pump; 57,192 recalled
  • 2011 Cadillac CTS AWD: Premature rollover airbag deployment linked to gasket leak between constant velocity joint and rear propeller shaft; 16,932 recalled
  • 2014 Chevrolet Corvette: Premature passenger seat side airbag deployment linked to unbelted child and door trim in models with the Competition Sport Seat option; 712 recalled
  • 2014 – 2015 Chevrolet Silverado; 2014 – 2015 GMC Sierra: Movement of driver-side all-weather floor mats due to missing attachments in vinyl-floor models; 184 recalled

The automaker expects to take a $700 million charge in addition to the $400 million already forecast for Q2 2014.

Regarding the original ignition-related recall of 2.6 million vehicles back in February of 2014, Bloomberg reports 154,731 of the affected models have been fixed thus far. GM has also shipped 396,253 repair kits around the world to help dealer service bays repair the problem. Production of the parts has been non-stop for its supplier Delphi, where the line has been going strong through multiple shifts seven days a week.

Finally, Just-Auto says the automaker plans to unveil three new compact vehicles under the Amber project. The new compact sedan, SUV and hatchback will be designed in Europe and assembled in Brazil, with the finished products heading for emerging markets such as Brazil, Russia, India, Mexico et al. Potential global production is expected to reach between 1 million and 1.2 million units annually beginning around 2018 at the earliest.

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U.S. Treasury Loses $11.2 Billion In Accounting Of GM Bailout http://www.thetruthaboutcars.com/2014/05/u-s-treasury-loses-11-2-billion-in-accounting-of-gm-bailout/ http://www.thetruthaboutcars.com/2014/05/u-s-treasury-loses-11-2-billion-in-accounting-of-gm-bailout/#comments Thu, 01 May 2014 10:00:35 +0000 http://www.thetruthaboutcars.com/?p=813385 Detroit Free Press reports the U.S. Treasury lost $11.2 billion in taxpayer money from the rescue of General Motors back in 2008, up from the $10.3 billion estimated after the agency sold its remaining shares back in early December 2013. Part of the final figure came as a write-off of an $826 million “administrative claim,” […]

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File photo of General Motors logo outside its headquarters at the Renaissance Center in Detroit

Detroit Free Press reports the U.S. Treasury lost $11.2 billion in taxpayer money from the rescue of General Motors back in 2008, up from the $10.3 billion estimated after the agency sold its remaining shares back in early December 2013. Part of the final figure came as a write-off of an $826 million “administrative claim,” which was found in a report by the Office of the Special Inspector General for the Troubled Asset Relief Program. The overall figure pales in comparison to the $50.2 billion given by both Bush and Obama administrations between 2008 and 2009 to GM as the automaker struggled through its financial crisis at the onset of the Great Recession.

In other financial news, Automotive News reports the automaker’s new financial arm, GM Financial, has launched a pilot program for prime-risk consumers in preparation for an expansion into the market later this summer. In addition, the auto lender proclaimed last week that it began GM-backed lending in the near-prime market during Q1 2014 alongside its subvented subprime loans. Finally, GM Financial reported a net income of $145 million during the same period — acquiring the majority of former GM lender Ally Financial’s International Operations, as well — with loan and lease originations totally $2.1 billion in the United States and Canada, $4.2 globally.

Another former GM subsidiary is looking into “improper payments” made by employees in China. As Reuters reports, Delphi found a number of these payments by manufacturing facility employees, which could be in violation of the U.S. Foreign Corrupt Practices Act. The supplier is working closely with both the Securities and Exchange Commission and the U.S. Department of Justice, as well as contacted outside counsel to assist. Delphi warned that if what they found was true, the violations “could result in criminal and/or civil liabilities and other forms of penalties or sanctions.”

The Detroit News says GM has begun construction on a new motorsport engine design and production facility set to open in 2016 within its Global Powerplant headquarters in Pontiac, Mich. One hundred engineers and technicians are expected to transfer from their posts in Wixom, Mich. to 138,000-square-foot Performance and Racing Center in Pontiac by the middle of 2015, where they will work alongside the production engine team in sharing technology gathered from the track. The center, part of a $200 million investment into GM’s Pontiac facility, will offer an electric motor lab and a gear center to aid in the development of advanced electric motors and transmissions.

Finally, Forbes posits that GM’s lack of thorough engagement with its customers could once again give some loyalists pause before giving their favorite brand the benefit of a doubt. In one example, the automaker — which already had fewer engaged consumers pre-recall than the likes of Ford, Hyundai and Toyota with their respective recalls — posted the largest post-recall decline while Toyota and Hyundai lost the least after their recalls. The low engagement figures for GM could be a sign of things to come as it works its way through its many issues beyond the original recall in February 2014.

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GM Internal Investigation Hindered By Corporate Culture http://www.thetruthaboutcars.com/2014/04/gm-internal-investigation-hindered-by-corporate-culture/ http://www.thetruthaboutcars.com/2014/04/gm-internal-investigation-hindered-by-corporate-culture/#comments Tue, 15 Apr 2014 10:58:40 +0000 http://www.thetruthaboutcars.com/?p=798970 Bloomberg reports now-former General Motors engineer Brian Stouffer conducted a two-year internal investigation into the out-of-spec switch at the heart of the automaker’s current recall crisis, only to find confusion and resistance along the way to finding answers as to why vehicles up through 2008 were stalling out. In addition, Stouffer reported to three different […]

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GM Next

Bloomberg reports now-former General Motors engineer Brian Stouffer conducted a two-year internal investigation into the out-of-spec switch at the heart of the automaker’s current recall crisis, only to find confusion and resistance along the way to finding answers as to why vehicles up through 2008 were stalling out. In addition, Stouffer reported to three different executives assigned to the investigation in one year as it moved along, as well as the lack of sufficient cases that met the criteria required. Only in late 2013, when Delphi responded to Stouffer’s inquiry by providing the document showing the changes made to the switch back in 2006, did the investigation come to a head.

Automotive News posits that the link between the out-of-spec switch and the 13 fatalities under the spotlight may have been muddied under other circumstances focused upon the drivers involved, ranging from being unbelted and driving under the influence, to speeding and lack of experience behind the wheel. Further, both police and the National Highway Traffic Safety Administration didn’t immediately make the link between the switch and undeployed airbags, the former citing numerous instances and the various reasons behind each failure.

Though it would appear as though GM were the new kings of recalls as of late, Boston-based used-car shopping site iSeeCars compiled data of the top 15 automakers who sold vehicles in the United States between 2005 and 2014, and found the automaker among the middle of the recall list with 96 recalls for every 100 vehicles sold. Toyota took the No. 1 spot with 167 recalls per 100 sold, while Mercedes-Benz took last place with 38 per 100.

Within GM, public relations head Selim Bingol and human resources chief Melissa Howell have both left the automaker “to pursue other interests.” The departures are not related to the recall crisis, according to spokesman Greg Martin, explaining the exits as “a part of any transition where the CEO makes changes and puts together her leadership team.” That team will now consist of John Quattrone, who will head the human resources department CEO Mary Barra ran until 2011, while head of investor relations Randy Arickx will serve as interim PR chief until a permanent replacement is found.

Finally, The Wall Street Journal reports Opel may finally break even ahead of a 2016 target date after years of seeing red. The charge toward equilibrium is being cautiously led by CEO Karl-Thomas Neumann, whose changes to the company — including the closure of a plant in Germany, a $6 billion investment in Europe, and the introduction of 23 models by 2016 — have helped Opel see a rise of 3 percent in European Union sales during the first two months of 2014. The news follows similar signs of hope for GM overall, as Automotive News adds Cadillac’s and Buick’s first-ever wins in J.D. Power & Associates’ 2014 Customer Service Index, as well as the Chevrolet Equinox/GMC Terrain twins being the only two midsize SUVs to receive a “good” rating by the Insurance Institute for Highway Safety in the small-overlap test as small victories for the automaker.

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Dealers Still Waiting For Replacements, DeGiorgio Linked To Original Design And Upgrade http://www.thetruthaboutcars.com/2014/04/dealers-still-waiting-for-replacements-degiorgio-linked-to-original-design-and-upgrade/ http://www.thetruthaboutcars.com/2014/04/dealers-still-waiting-for-replacements-degiorgio-linked-to-original-design-and-upgrade/#comments Mon, 14 Apr 2014 14:00:51 +0000 http://www.thetruthaboutcars.com/?p=797362 Automotive News reports dealers are still waiting for the ignition switches meant to replace the out-of-spec switch at the center of the ongoing recall crisis at General Motors. The switch was to have arrived at dealerships beginning this week, yet most dealers are in a “holding pattern” on deliveries. Once the parts do arrive, service […]

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GM ignition diagram

Automotive News reports dealers are still waiting for the ignition switches meant to replace the out-of-spec switch at the center of the ongoing recall crisis at General Motors. The switch was to have arrived at dealerships beginning this week, yet most dealers are in a “holding pattern” on deliveries. Once the parts do arrive, service bays will begin work on affected customer vehicles immediately before turning toward the used lot, where vehicles under the recall are currently parked until the customer vehicles are fixed.

As for GM seeking help from NASA with its woes, however, The Detroit Bureau learned from NASA Deputy Associate Administrator for Communications Bob Jacobs that his employer “is not working with General Motors on its ignition switch issue”; a separate source claimed “low-level” discussions between the two were taking place, but hasn’t gone any further thus far. He added that while NASA would be more than willing to help GM, a formal request would require some coordination between the agency and both the National Highway Traffic Safety Administration and the Justice Department so as to not interfere “with their own, ongoing investigations of the GM ignition switch recall.”

Speaking of the Justice Department, Reuters says five senators, including Richard Blumenthal of Connecticut and Barbara Boxer of California, penned a letter asking Attorney General Eric Holder to “intervene in pending civil actions to oppose any action by GM to deny responsibility for damages”:

We write to request your immediate intervention and assistance on behalf of victims of severe damage – financial harm, physical injury, and death – resulting from serious ignition switch defects in General Motors (‘GM’) cars.

The aforementioned actions may be in reference to the liability shield erected upon the automaker’s 2009 exit from Chapter 11 bankruptcy, where “New GM” is only responsible for the claims linked to the switch from June 2009 forward.

That division within the company may be more of a thin line than a 4-inch-thick steel plate, however, as Autoblog reports an investigation by the House Energy and Commerce Committee uncovered an email exchange between the NHTSA and GM last July to discuss the latter’s “indifferent attitude toward safety issues” face-to-face. The agency cited the automaker’s slow response to urgent matters and preference toward regional recalls over full recalls as two examples of GM not having changed much since leaving bankruptcy.

Bloomberg adds the agency itself didn’t do enough to take GM to task on its attitude toward safety, though, based on a memo unearthed by the committee regarding airbag failures on a number of Chevrolet Cobalts and Saturn Ions with warranty claims being four times’ higher than similar competitors. The decision to investigate those claims was rejected by a review group within the NHTSA, believing the airbag issue “did not stand out” among other incidences of failure.

Automotive News reports the committee also found an email chain that ties GM engineer Ray DeGiorgio — who denied having knowledge of the April 2006 change to the ignition without a change to the part number — with said change. In short: DeGiorgio signed-off on both changes to the spring and plunger to help prevent the slipping issue now linked to 13 fatalities and 33 accidents, as well as on the decision to retain the original number issued to the part he designed for the Saturn Ion as his first project for GM in 2001.

Regarding the Ion, Reuters says the troubled development of the compact vehicle — and the equally troubled relationship between GM and supplier Delphi — may have laid the groundwork for the current recall crisis. The supplier alerted the automaker about the out-of-spec switch, but fearing an embarrassing introduction, money issues, and the possible wrath of then-vice chairman of product development Bob Lutz, GM pressed ahead with the switch as-is.

 

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GM Adds Clinton Media Director To Crisis Team http://www.thetruthaboutcars.com/2014/04/gm-adds-clinton-media-director-to-crisis-team/ http://www.thetruthaboutcars.com/2014/04/gm-adds-clinton-media-director-to-crisis-team/#comments Fri, 04 Apr 2014 19:27:37 +0000 http://www.thetruthaboutcars.com/?p=787369 In an interview with New York Magazine, consumer advocate Ralph Nader said General Motors CEO Mary Barra has “a good opportunity” to make serious changes to the corporate cost culture that gave rise to the 2014 ignition recall crisis. Suggestions include appointing an independent ombudsman with a direct line to the president and CEO for […]

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Original 5 tower complex, John Portman, 1977

In an interview with New York Magazine, consumer advocate Ralph Nader said General Motors CEO Mary Barra has “a good opportunity” to make serious changes to the corporate cost culture that gave rise to the 2014 ignition recall crisis. Suggestions include appointing an independent ombudsman with a direct line to the president and CEO for engineers who need to speak out about possible problems without having to go through “cost-concerned bosses,” as well as holding accountable all involved in any cover-up of any potential product issues.

Nader also believes the federal government should go after personal prosecutions of those tied to the current recall, but adds that unless the media keeps putting the pressure on the Justice Department to do so, the only thing that could come is a settlement in the vein of the one reached between the agency and Toyota earlier this month.

As for where Barra was during the 14 years it took for the recall to surface, Forbes wove her 34-year-long résumé with General Motors into the recall timeline. In short: Barra would have been made aware of the ignition switch problem as early as 2011, when then-CEO Dan Akerson made her head of global product development, yet it was only in December of 2013 — when the torch was passed from Akerson to Barra — when the new CEO was presented with an analysis of the issue linked to the Chevrolet Cobalt; the recall decision would be presented to Barra by product development chief Mark Reuss at the end of January 2014.

Detroit Free Press reports the National Highway Traffic Safety Administration received 200,000 from GM in response to the 107-question survey aimed to drill down what had happened leading up to the recall, as explained in a statement issued by the automaker:

The company has submitted some 200,000 pages of documents and will provide today answers to nearly 65% of the questions. GM is cooperating fully with NHTSA and is keeping the agency apprised at every step of its progress as it works to respond to the remaining questions within the Special Order.

The agency will release the documents upon vetting, a process that could take weeks to accomplish.

Meanwhile, Bloomberg reports the task force appointed by the Obama Administration to manage GM’s bankruptcy proceedings were not made aware of the out-of-spec ignition and subsequent reports linked to its failure. The task force spent more time focusing on what brands needed to be cut and how pensions and health care would be handled, with then-current product-liability claims — totaling $414 million pre-bankruptcy — given a broad look without looking ahead toward future claims.

Within the Capitol, the nation’s lawmakers are considering higher fines and criminal liability in the wake of the two congressional hearings earlier this week. Senator Jay Rockerfeller of West Virginia plans to propose an update to the 2000 TREAD Act in the aim of giving the NHTSA more firepower to take automakers to task over failures to properly and quickly handle potential problems, while regulators would like to boost the agency’s fine limit from $35 million to $300 million.

Back in Detroit, GM has hired crisis-communications expert and former director of media affairs for the Clinton Administration Jeff Eller to join the growing team of experienced crisis managers — including Kenneth Feinberg and Anton Valukas — assembled to guide the automaker through the ongoing recall debacle. Eller worked on the Firestone-Ford crisis in 2000, and will have a number of GM’s allies inside the Beltway on his side.

GM’s partner in the maelstrom, Delphi, may emerge less unscathed if the supplier’s stronger bankruptcy protections hold according to Reuters. Unlike the automaker, Delphi did not assume successor liability during its 2009 bankruptcy proceedings, forcing lawyers to convince any judge who hears their cases that Delphi covered-up the design flaw, and thus, should force “New Delphi” into becoming liable.

Speaking of lawsuits, Bloomberg reports U.S. District Judge Nelva Gonzales Ramos in Corpus Christi, Texas is preparing to consider issuing an order to GM to instruct all affected consumers to park their vehicles until the flaw is fixed. The order is part of a class-action lawsuit filed by Robert Hilliard on behalf of Charles and Grace Silvas, seeking as much as $10 billion in lost resale value for the vehicles under the recall. The Detroit News adds Hilliard sent an email to Barra with evidence from an affidavit illustrating that even with the key stripped down to the bone, the switch will still shut the vehicle off, including the airbag system.

Finally, Reuters reports GM dealerships may have more than polar vortices to weather on the sales floor as a result of the recall. Dealers have reported fielding as many as 50 calls per day from concerned consumers over what to do with their affected vehicles, as well as offering more rental cars and taking in more trade-ins. Spokesman Jim Cain offered his view on the situation facing dealers:

Time will tell. In the long term, we will be judged on how we take care of customers. We have advertising incentives and other tools to use if there’s evidence that sales in the short term may be impacted. But we haven’t seen that.

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Congressional Hearings Loom As Switch Swap Raises Questions At GM http://www.thetruthaboutcars.com/2014/03/congressional-hearings-loom-as-switch-swap-raises-questions-at-gm/ http://www.thetruthaboutcars.com/2014/03/congressional-hearings-loom-as-switch-swap-raises-questions-at-gm/#comments Tue, 25 Mar 2014 13:30:40 +0000 http://www.thetruthaboutcars.com/?p=780281 General Motors is facing two separate lawsuits related to failures of the ignition switch recalled last month, while also preparing to bring their case before the U.S. House Energy and Commerce Committee next month, led by a representative who honed his skills upon Firestone. Meanwhile, reports of a quiet swap between the defective ignition switch […]

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800px-Pontiac_G5_coupe

General Motors is facing two separate lawsuits related to failures of the ignition switch recalled last month, while also preparing to bring their case before the U.S. House Energy and Commerce Committee next month, led by a representative who honed his skills upon Firestone.

Meanwhile, reports of a quiet swap between the defective ignition switch and an improved switch in 2006 – a swap that may have violated internal protocols -may have serious repercussions for GM and now-bankrupt supplier Delphi.

Finally, a test drive gone wrong results in a GMC Yukon left to burn, whose prompt investigation is only the beginning of a long learning process in how GM handles safety in the future.

Reuters and Just-Auto report two lawsuits were filed against GM over the weekend in Minnesota and California. The former, filed in state court on behalf of three teenage girls severely injured or killed in a 2006 crash involving a 2005 Chevrolet Cobalt, is considered to be the first wrongful death lawsuit since the recall was issued.  Robert Hilliard of Hilliard Munoz Gonzales is seeking $50,000 for each of the families affected, and names “New GM” as defendant.

The second, filed in federal court as a national class action by Michaels Law Group, cites fraudulent behavior on GM’s part over the ignition switch and subsequent recall. Founding firm member Johnathan Michaels called the automaker’s actions “an unfortunate chapter” in United States history, and proclaimed GM “allowed products to be put in the stream of commerce, knowing that people would die.”

Reuters also reports U.S. Senator Richard Blumenthal of Connecticut, who is a member of the Senate Commerce Committee, penned a letter to Attorney General Eric Holder asking the Department of Justice to demand GM establish a fund “to fully compensate consumers who suffered injury, death or damage” as a result of the ignition switch. He also suggested said fund could be applied while the DOJ conducts their investigation into the recall, one of many being conducted by various federal parties, including the Commerce Committee and the House Energy and Commerce Committee.

Bloomberg says Representative Fred Upton of Michigan, one of 32 House Republicans to back the 2008 bailouts and former co-chair of the Congressional Automotive Congress, will be take part in hearings on April 1 when the committee meets with GM CEO Mary Barra and other executives in a hearing to discuss what happened with the recall. Fourteen years earlier, Upton took on Ford and Firestone over the Explorer’s defective tires, resulting in the Transportation Recall Enhancement, Accountability and Documentation Act of 2000 now affecting both General Motors and the National Highway Traffic Safety Administration.

Regarding the NHTSA, the Detroit Free Press reports Senator Dean Heller of Nevada sent a letter to agency acting head David Friedman asking for answers by the end of the month as to why the NHTSA’s Office of Defects Investigation “declined to forward in both 2007 and 2010 on any vehicle recall recommendation” despite receiving direct access to necessary information from GM. Heller also wants to know what if any threshold complaints need to cross before further investigation is taken.

Back home, GM’s knowledge of the defective component — and its subsequent silence — may also claim Delphi under the wave of red flags the automaker ignored at its peril. Automotive News says the litigation protection established for the supplier during its Chapter 11 bankruptcy process could fall if Delphi was found to have committed fraud by not disclosing their part in the ignition defect during proceedings.

Within the Renaissance Center, USA Today says GM learned in 2007 of a 2005 fatality when a Maryland teen, Amber Marie Rose, lost control of her Cobalt and crashed into a tree while intoxicated. The report noted the airbags had not gone off as intended, with the cause linked to the switch set to “accessory” instead of “on.”

Meanwhile, Automotive News reports the in-house-designed switch — the result of the automaker wanting to do more on its own amid rising warranty costs in the mid-1990s — didn’t meet the specs required of it until its redesign in 2006, nine years after engineers were asked to design the part. However, the improved part retained its old part number when former GM engineers claim it shouldn’t have, while GM remained quiet on the matter until 2013 when a wrongful death lawsuit from Georgia started the ball rolling on the issue.

In the wake of the ongoing maelstrom, GM appointed long-serving engineer Jeff Boyer to the newly created position of vice president of global safety. Boyer will report to Barra on all safety concerns and recall decisions. Automotive News says this is just the first in a series of moves the automaker is taking to show how it has changed since emerging from bankruptcy and government ownership over the past few years, but has a long road ahead in making substantial progress regarding its long-standing bureaucratic culture.

Finally, The Los Angeles Times reports a 2015 GMC Yukon taken for a test drive in Anaheim this weekend suffered from what Anaheim Police Department Lieutenant Tim Schmidt says was “some oil leak or some fluid leaking” during the drive, leading to a catastrophic fire once the driver pulled over upon losing control of the vehicle. Autoblog adds GM will be investigating the matter “very soon,” as per the words of spokesman Alan Adler. No one was hurt in the incident.

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GM Found Ignition Switch Issues In 2001 With Saturn, Updated Chronology, New Study Shows 303 No-Airbag Deaths [w/ Full Text] http://www.thetruthaboutcars.com/2014/03/gm-found-ignition-switch-issues-in-2001-with-saturn-updated-chonology-new-study-shows-303-no-airbag-deaths-w-full-text/ http://www.thetruthaboutcars.com/2014/03/gm-found-ignition-switch-issues-in-2001-with-saturn-updated-chonology-new-study-shows-303-no-airbag-deaths-w-full-text/#comments Fri, 14 Mar 2014 20:45:57 +0000 http://www.thetruthaboutcars.com/?p=771081 General Motors released their updated chronology to the recall effecting the 2007 and earlier Chevrolet Cobalt and HHR; Pontiac G5 and Solstice; and Saturn Ion and Sky. Most of the new chronology works just to update the document with the expanded recall, but there’s a key update: During the Saturn Ion development in 2001, a […]

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General Motors released their updated chronology to the recall effecting the 2007 and earlier Chevrolet Cobalt and HHR; Pontiac G5 and Solstice; and Saturn Ion and Sky. Most of the new chronology works just to update the document with the expanded recall, but there’s a key update:

During the Saturn Ion development in 2001, a preproduction model had  an ignition cylinder problem that was caused by, you guessed it, “low detent plunger force,” the result being that it takes a low amount of effort to knock the key out of the “run” position.

The 2001 Saturn Ion pre-production report goes on to say that design changes to the ignition cylinder seemingly eliminated the issue. However, in 2003 a report documented an instance where an Ion was brought in for repair, and the technician servicing the car experienced a situation where the Ion stalled while driving, due to the key rotating “off.” The technician noted that “[t]he owner had several keys on the key ring,” and initially thought that “[t]he additional weight of the keys had worn out the ignition switch.” The technician replaced the ignition cylinder, and the report was closed.

As we discussed in previous posts, Technical Service Bulletins (known by GM as Information Service Bulletins, or ISP for short) is the result of several field reports on a common issue, and is eventually entered into a database known as the General Motors Vehicle Information System, or GMVIS for short. ISB’s are not found by a tech unless they are searching for a related issue. Thus, the 2003 example above is an early report that lead to ISB  #05-02-35-007.

Also outlined in the updated chronology deals with Saturn’s  sensing and diagnostic module (“SDM”), which differs from the Cobalt in that it is designed to stop recording once the engine of the car is no longer running. This means that crash data from a Saturn Ion SDM is not as conclusive as a Cobalt’s, which continues to record the ignition position during an accident in which the engine has been turned off.

Despite this, GM believes that the ignition cylinder issue has lead to eight accidents and four fatalities involving a Saturn Ion. At least three accidents involving the Chevrolet HHR can be linked; but no accidents involving a Pontiac Solstice or Saturn Sky have been found by GM. This brings the confirmed number of accidents to 31, and total number of deaths to 13.

The New York Times reports that in a study initiated by the Center for Automotive Safety (“CSA”), a private watchdog group, Friedman Research Corporation analyzed federal crash data and found 303 deaths linked to no airbag deployment in the recall-effected vehicles. The study does not link these no-airbag crashes to the ignition switch maladies, but questions why the NHTSA took so long to react to a mounting problem with the Cobalt and Ion.

In the letter to the NHTSA, CSA states the “NHTSA should have and could have initiated a defect investigation to determine why airbags are not deploying in Cobalts and Ions in increasing numbers.” And GM has began its own internal investigation, hiring former United States attorney for Northern Illinois, Anton Valukas to investigate.

“Research is underway at G.M. and the investigation of the ignition switch recall and the impact of the defective switch is ongoing,” Mr. Martin, the G.M. spokesman, said. “While this is happening, we are doing what we can now to ensure our customers’ safety and peace of mind. We want our customers to know that today’s G.M. is committed to fixing this problem in a manner that earns their trust.”

What have we learned through all of this? The engineers and technicians did their job, and GM had every piece of the puzzle; but as explained in the chronology, each piece was scattered about by an alphabet soup of committees. The review process let us down, both with Delphi’s quality control in the early switches and GM’s internal reaction to the situation. Further investigation will hopefully lead us to fully understanding the error in GM’s review process.

The full text of the updated chronology can be seen here.

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Report: Treasury Behind Delphi Pensions Debacle http://www.thetruthaboutcars.com/2012/08/455806/ http://www.thetruthaboutcars.com/2012/08/455806/#comments Tue, 07 Aug 2012 17:21:58 +0000 http://www.thetruthaboutcars.com/?p=455806 The Daily Caller says it has emails that prove that the pensions of 20,000 salaried retirees at Delphi were terminated “solely because those retirees were not members of labor unions.” The emails, says the conservative website “contradict sworn testimony, in federal court and before Congress, given by several Obama administration figures. They also indicate that […]

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The Daily Caller says it has emails that prove that the pensions of 20,000 salaried retirees at Delphi were terminated “solely because those retirees were not members of labor unions.”

The emails, says the conservative website “contradict sworn testimony, in federal court and before Congress, given by several Obama administration figures. They also indicate that the administration misled lawmakers and the courts about the sequence of events surrounding the termination of those non-union pensions, and that administration figures violated federal law.”

In 1994, GM spun off its parts business into Delphi.  In 2005, the company went Chapter 11.  Later, parts of the business was sold, wound down, or sold back to GM. Says the Daily Caller:

“Twenty thousand of its workers lost nearly their entire pensions when the government bailed out GM. At the same time, Delphi employees who were members of the United Auto Workers union saw their pensions topped off and made whole.”

In sworn testimony, former Treasury official Matthew Feldman and former White House auto czar Ron Bloom, stated that the Pension Benefit Guaranty Corporation (PBGC), and not the administration, “led the effort to terminate the non-union Delphi workers’ pension plan,” the Daily Caller says. “The emails TheDC has obtained show that the Treasury Department, not the independent PBGC, was running the show.”

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GM Books $1.6b Gain On Delphi Share Sale/Pension Shell Game http://www.thetruthaboutcars.com/2011/03/gm-books-1-6b-gain-on-delphi-share-salepension-shell-game/ http://www.thetruthaboutcars.com/2011/03/gm-books-1-6b-gain-on-delphi-share-salepension-shell-game/#comments Thu, 31 Mar 2011 23:16:16 +0000 http://www.thetruthaboutcars.com/?p=389371 As galling as the auto bailout was for many Americans, the hidden “stealth bailouts” that occurred during the government-led industry reorganization are often even more galling. Today the final chapter of one of those “stealth bailouts” has taken place, as GM has sold its stake in its spun-off supplier Delphi for $3.8b, booking a $1.6b […]

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As galling as the auto bailout was for many Americans, the hidden “stealth bailouts” that occurred during the government-led industry reorganization are often even more galling. Today the final chapter of one of those “stealth bailouts” has taken place, as GM has sold its stake in its spun-off supplier Delphi for $3.8b, booking a $1.6b gain on the deal. So, how is GM divorcing its former in-house supplier a stealth bailout? Back in the dark Summer of 2009, the government organized a GM-led rescue of Delphi, which had been languishing in bankruptcy since 2005 (after GM. By buying a chunk of Delphi for $2.5b of the government’s money and selling it back for a profit, GM’s helped itself to a little extra bump of public money. Oh, and did we mention that GM dropped all kind of pensions in Delphi’s lap when it spun the supplier, including workers who had never been employed by Delphi.

But that’s not the worst part: any guesses as to why GM’s stake in Delphi is suddenly worth so much more? A recovering industry, perhaps? Wrong. Shortly after GM bought back its stake in Delphi, the supplier dumped $6.5b worth of pensions onto the government’s Pension Benefit Guarantee Company, causing huge benefit cuts and hidden government costs. What did the PBGC’s stake, given as “partial compensation” for that pension dump, yield it? A cool $594m. Meanwhile, thanks to the government ‘s arguments, GM still had to top-up UAW retiree pensions, leaving non-union retirees and members of other unions out in the cold [read all about it in a just-released GAO report in PDF here]. A shell game inside of a political payoff inside of another shell game, in other words. There’s nothing to not love here…

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Shafted Delphi Retirees Lose Their Shirt – Again http://www.thetruthaboutcars.com/2011/02/shafted-delphi-retirees-lose-their-shirt-again/ http://www.thetruthaboutcars.com/2011/02/shafted-delphi-retirees-lose-their-shirt-again/#comments Tue, 15 Feb 2011 11:08:41 +0000 http://www.thetruthaboutcars.com/?p=383935 Delphi’s salaried retirees lost their shirts after the Delphi bankruptcy and the GM bailout. Now they lost their main voice in congress. Rep. Christopher Lee resigned last week after Gawker showed a picture of a bare-chested congressman. Lee had sent the picture to a single woman he had contacted via Craigslist. According to Automotive News […]

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Delphi’s salaried retirees lost their shirts after the Delphi bankruptcy and the GM bailout. Now they lost their main voice in congress. Rep. Christopher Lee resigned last week after Gawker showed a picture of a bare-chested congressman.

Lee had sent the picture to a single woman he had contacted via Craigslist. According to Automotive News [sub], Lee had led more than 20 congressmen who “persistently complained to Treasury Secretary Timothy Geithner and other officials that 15,000 salaried Delphi retirees may have their pensions cut by as much as 70 percent.”

Gawker also published an email exchange between the congressman and the Craigslist woman. In the mails, Lee said he was a divorced 39-year-old lobbyist. He is a married 46-year-old with a young son.

The Craigslist woman ratted on Lee because she “was just sharing the story.”

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Inspired By Quadrangle Scandal, Republicans Call For Investigation Into Rattner’s Delphi Dealings http://www.thetruthaboutcars.com/2010/04/inspired-by-quadrangle-scandal-republicans-call-for-investigation-into-rattners-delphi-dealings/ http://www.thetruthaboutcars.com/2010/04/inspired-by-quadrangle-scandal-republicans-call-for-investigation-into-rattners-delphi-dealings/#comments Fri, 30 Apr 2010 01:14:05 +0000 http://www.thetruthaboutcars.com/?p=354782 When former auto task force boss Steve Rattner’s former firm Quadrangle recently settled a “pay-to-play” corruption investigation, it threw Rattner under the bus, saying: We wholly disavow the conduct engaged in by Steve Rattner, who hired the New York State Comptroller’s political consultant, Hank Morris, to arrange an investment from the New York State Common […]

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When former auto task force boss Steve Rattner’s former firm Quadrangle recently settled a “pay-to-play” corruption investigation, it threw Rattner under the bus, saying:

We wholly disavow the conduct engaged in by Steve Rattner, who hired the New York State Comptroller’s political consultant, Hank Morris, to arrange an investment from the New York State Common Retirement Fund. It is our understanding that Mr. Rattner also arranged a DVD distribution deal for a movie produced by the Chief Investment Officer’s brother in the middle of the investment decision-making process. That conduct was inappropriate, wrong, and unethical. Mr. Rattner is no longer with the firm and is not a part of today’s settlement. Quadrangle will fully cooperate in the Attorney General’s ongoing investigation of Mr. Rattner and others.

According to the DetN, that stinging indictment by Rattner’s former firm has inspired House Republicans to call for an investigation into whether Rattner was behind a deal in which some Delphi retirees lost their pensions while others didn’t.

A letter from Reps Mike Rogers (R-MI) and Christopher Lee (R-NY) to the House Oversight Committee argues that the investigation of Rattner:

[calls] into question the integrity and objectivity of Mr. Rattner’s panel, particularly the decision to allow some Delphi Corp. retirees, including many salaried retirees, to lose their pension benefits through the Pension Benefit Guaranty Corporation while simultaneously protecting the benefits of other Delphi retirees.

However, that deal hardly needs a lot of in-depth investigation to get to the bottom of. As The Milwaukee Journal Sentinel explains, GM agreed to “top off” UAW pensions when it spun Delphi off in 1999. However:

The salaried retirees had no such agreement – and, it turns out, neither did employees who belonged to some other unions, including the International Brotherhood of Electrical Workers, the International Association of Machinists and Aerospace Workers, and the International Union of Operating Engineers.

When Delphi dropped those pensions on the PBGC, the 70,000 non-UAW retirees saw their benefits drop by $800m. And why would Steve Rattner have changed any of that? Rogers and Lee are trying to investigate a sin of omission rather than a sin of commission. The original sin in the sad story of Delphi was GM and the UAWs… all Rattner had to do was not fix it.

We sympathize when Rogers says:

It was completely unfair how they were treated… We need to ask some really hard questions about how this happened.

But just because Rattner screwed up at Quadrangle doesn’t prove anything about Delphi. That situation was screwed up long before Steve Rattner arrived.

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GM and Delphi Ditching UAW For New “Green” Production Jobs http://www.thetruthaboutcars.com/2010/02/gm-and-delphi-ditching-uaw-for-new-green-production-jobs/ http://www.thetruthaboutcars.com/2010/02/gm-and-delphi-ditching-uaw-for-new-green-production-jobs/#comments Tue, 09 Feb 2010 18:27:25 +0000 http://www.thetruthaboutcars.com/?p=344817 As GM tools up for production of its Volt extended-range electric car, Automotive News [sub] has noticed something interesting: workers at GM’s new battery pack assembly plant are not represented by the United Auto Workers. Located in the heart of UAW territory (Brownstown Township, MI), the Volt battery plant represents the very jobs that local […]

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As GM tools up for production of its Volt extended-range electric car, Automotive News [sub] has noticed something interesting: workers at GM’s new battery pack assembly plant are not represented by the United Auto Workers. Located in the heart of UAW territory (Brownstown Township, MI), the Volt battery plant represents the very jobs that local politicians and GM leadership hailed as the green future of the auto industry. When the plant opened, GM Chairman/CEO Ed Whitacre waxed eloquent about the opportunities:

The development of electric vehicles like the Chevy Volt is creating entire new sectors in the auto industry – an “ecosystem” of battery developers and recyclers, builders of home and commercial charging stations, electric motor suppliers and much more. These companies and universities are creating new jobs in Michigan and across the U.S. – green jobs – and they’re doing it by developing new technology, establishing new manufacturing capability, and strengthening America’s long-term competitiveness.

As long as they do so without UAW representation, apparently. Needless to say, if GM can get away with using non-union workers at a crucial plant that’s supposed to represent the firm’s future, things aren’t looking so good for our friends in organized labor.

And though GM only has 25 workers currently working the Brownstown plant, that number will increase, and the symbolism is far more important than pure numbers. The plant is part of a new wholly-owned subsidiary called GM Subsystems Manufacturing LLC, and GM spokesfolks confirm that non-union labor was an important factor in maintaining competitive manufacturing costs.

Though electric motor production at Maryland’s White Marsh plant will be a union shop, GM’s biggest supplier Delphi is also taking measures to keep its EV component factory in Kokomo, IN, free from union representation (in line with its new union-free mantra). Kokomo Local 292’s president calls the decision a “smack in the face” for the union, which is facing a decades-long slide in membership. The former DuPont plant will supply electric drives to Allison Transmission for use in medium-duty trucks and buses, and will eventually see its non-union workforce grow to 190.

Meanwhile, five Delphi plants that were transferred to GM during the supplier’s bankruptcy are being pressured to break their master agreements so they can compete amongst each other for work. In fairness though, UAW leadership doesn’t seem to be doing much to improve the situation for workers.

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What’s Wrong With This Union? http://www.thetruthaboutcars.com/2010/01/whats-wrong-with-this-union/ http://www.thetruthaboutcars.com/2010/01/whats-wrong-with-this-union/#comments Fri, 29 Jan 2010 19:56:52 +0000 http://www.thetruthaboutcars.com/?p=343442 Ford’s announcement that it would restore merit pay increases and 401k matching to salaried employees has drawn protests from the UAW even though it has restored profit-sharing for UAW workers. The UAW’s head of Ford representation Bob King tells the Detroit News: They’re two separate issues. We gave up a long laundry list of benefits. […]

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Ford’s announcement that it would restore merit pay increases and 401k matching to salaried employees has drawn protests from the UAW even though it has restored profit-sharing for UAW workers. The UAW’s head of Ford representation Bob King tells the Detroit News:

They’re two separate issues. We gave up a long laundry list of benefits. None of that is being restored. We think they should use the money to pay down debt

We agree that they’re not linked,” say Ford spokesfolks. “But we don’t believe that we violated the contract.” And while the union bashes Ford for restoring white-collar benefits, it’s actually reaching out to salaried Delphi retirees, as MLive reports that UAW boss Ron Gettelfinger has written a letter to Delphi asking it to restore salaried pensions which are being cut. So does the UAW support salaried auto industry employees, or does it see them as an opponent in a zero-sum game? More than likely, the answer is neither. Or both. As this video of chaos breaking out at a UAW meeting of NUMMI workers seems to indicate, the UAW is still an out-of-control juggernaut, unable to share a coherent perspective on the industry. But hey, thanks to their ownership of a majority stake in Chrysler and about 15 percent of GM, they’re an out-of-control fact of life.

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Aptera Ouster And Product Delay Confirmed http://www.thetruthaboutcars.com/2009/11/aptera-ouster-and-product-delay-confirmed/ http://www.thetruthaboutcars.com/2009/11/aptera-ouster-and-product-delay-confirmed/#comments Wed, 18 Nov 2009 20:12:25 +0000 http://www.thetruthaboutcars.com/?p=336057 After we posted our take on the reported ouster of EV startup Aptera’s founders, Popular Mechanics jumped in to deny the charge. The magazine dutifully reported that Aptera’s founders had conveniently decided to take a vacation, unquestioningly citing the assertions of Aptera CFO Marques McCammon. But it seems the underlying conflict– whether to go to […]

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Leaving on a jet plane? (courtesy:fuel-efficient-vehicles.org)

After we posted our take on the reported ouster of EV startup Aptera’s founders, Popular Mechanics jumped in to deny the charge. The magazine dutifully reported that Aptera’s founders had conveniently decided to take a vacation, unquestioningly citing the assertions of Aptera CFO Marques McCammon. But it seems the underlying conflict– whether to go to market with the existing product or cut costs while waiting for federal funding to produce a redesigned vehicle– has been resolved in favor of Aptera’s new auto industry insiders. A company press release confirms that the 2e has been delayed until 2010, indicating that the lack of federal funding (or some unanticipated private investment) is the stumbling point. The situation with Aptera’s founders, however, is still something of a mystery. And it’s not the only curiosity to be dredged out of Aptera during this challenging interlude.

Aptera CEO Paul Wilbur explains in the company press release:

“Because of this production delay, we’ve unfortunately been forced to lay off some hard working employees. It’s a strategy to streamline our spending to hone in on the items that advance our fundraising and completion of our first vehicle.

“Additionally as part of this plan, co-founder Chris Anthony is stepping aside from day-to-day activities to concentrate on his two other companies, Epic Boats and Flux Power.”

Aptera’s other co-founder, Steve Fambro, who started tinkering with the idea of building an aerodynamic vehicle five years ago, is taking a short leave of absence and will re-engage with the company in the new year.

“Right now my advanced work is a lower priority for Aptera,” said Fambro, the company’s Chief Technical Officer who directs all advanced concept development activities. “We’ve got to be wholly focused on funding and getting the first 2e on the road.

Meanwhile, the rule that drama seems to beget more drama is proving true. “S.Hval” sent us a tip on a rumor swirling around the ApteraForum, centering on company CFO Laura Marrion. Though you wouldn’t know it from her official bio (which only lists experience at Saleen and Specialty Vehicles Acquisition Corp), Marrion was fined $40k by the SEC for her role in Delphi’s $700m accounting fraud. Marrion came into the company with Wilbur and a number of other industry insiders, and though there’s no evidence that there’s monkey business going on in bookkeeping, her role in the Delphi fraud isn’t helping Aptera’s true believers deal with the loss of the company’s founders.

Adding to the drama is the fact that fans have found that Aptera’s news feed has been modified to eliminate all signs of bad news. EV startups, especially those with quirky designs like Aptera’s, are fueled by the passion of enthusiasts who are willing to overlook all kinds of downsides in order to get what they believe to be bleeding-edge vehicles. At this point, bringing in Detroit insiders is not looking like a good way to build on that enthusiasm.

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$13.6 Billion Remaining in GM’s Bailout Escrow Account http://www.thetruthaboutcars.com/2009/11/13-6b-remaining-in-gms-bailout-escrow-account/ http://www.thetruthaboutcars.com/2009/11/13-6b-remaining-in-gms-bailout-escrow-account/#comments Tue, 03 Nov 2009 00:36:19 +0000 http://www.thetruthaboutcars.com/?p=333843 \ GM was given its last $30B of taxpayer money as it entered bankruptcy in early June of this year. By the time GM exited Chapter 11 protection on July 10, there was only $16.4B left in its bailout escrow account. According to an 8-K form filed today with the SEC, GM now has only […]

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\Stop me if you've seen this one... (courtesy:spillingcoffee.com)

GM was given its last $30B of taxpayer money as it entered bankruptcy in early June of this year. By the time GM exited Chapter 11 protection on July 10, there was only $16.4B left in its bailout escrow account. According to an 8-K form filed today with the SEC, GM now has only $13.6B remaining in that account, less than one-third of GM’s $50B total bailout (not counting assistance to GMAC). GM’s rescue of its major supplier, Delphi, consumed $2.8 billion from its escrow account. According to the form:

Approximately $1.7 billion was utilized to acquire a membership interest in the new Delphi entity and approximately $1.1 billion was expended in the acquisition of Delphi’s global steering business, certain domestic facilities and other related payments

The form also confirms that GM spent about $417M on GM-Daewoo’s recent rights offering, but notes:

GM has not finalized the accounting treatment for the participation in GM Daewoo’s equity rights offering.

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GM “Accelerates” $50m Payment to Delphi; Delphi Cuts Health Care http://www.thetruthaboutcars.com/2009/02/gm-accelerates-50m-to-delphi-delphi-cuts-health-care/ http://www.thetruthaboutcars.com/2009/02/gm-accelerates-50m-to-delphi-delphi-cuts-health-care/#comments Fri, 06 Feb 2009 13:51:46 +0000 http://www.thetruthaboutcars.com/?p=241362 If you’re familiar with Delphi—a former GM division with the words “bankrupt since October 10, 2005” over the door—then you’ll know that they’re a not-so-hidden cancer on GM cancerous corpse. Even as The General seeks to survive with a federal IV stuck in its metaphorical artery, it continues to peel off just enough cash—now your […]

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If you’re familiar with Delphi—a former GM division with the words “bankrupt since October 10, 2005” over the door—then you’ll know that they’re a not-so-hidden cancer on GM cancerous corpse. Even as The General seeks to survive with a federal IV stuck in its metaphorical artery, it continues to peel off just enough cash—now your cash—to keep the parts maker making parts. For vehicles no one’s buying; but that’s how the industry doesn’t roll these days. So, some bad news from the oracle then. First, GM’s told their pals at the SEC (accounting scandal forgotten) that they’re accelerating a $50m payment to Delphi. [NB: Delphi had asked GM for a $100m hurry-up.] Can you say running on fumes? Delphi can. “The Company believes the amendment and accelerated GM support will enable it to preserve available liquidity given the difficult economic environment, particularly in the global automotive industry,” Delphi said in a filing with their pals over at the federal bankruptcy court. Judge Robert Drain, no less. And the cutbacks keep on happening!

The Detroit News reports that both of Delphi’s remaining U.S.-based white collar workers are about—or in DetN-speak “may”—lose their health care benefits. Just joking. Some 10k workers face this grim prospect. As Warren Zevon says, it ain’t that funny at all. [Speaking of "shared sacrifice," Delphi's UAW workers are exempt from this one.] Here’s the skinny.

Troy-based Delphi Corp. sought permission Wednesday from a federal bankruptcy court in New York to cancel retiree health benefits for current and future salaried retirees, a move that it says would save the company $200 million from 2009 through 2011.

The auto parts supplier also sought to end post-retirement basic life insurance benefits for current and future retirees.

The moves would allow Delphi to reduce its balance sheet liabilities by $1.1 billion. About 15,000 salaried retirees with medical and insurance benefits would lose coverage. The company wants to end coverage “as soon as (it is able) after March 31.”

Can they do that? They can do that. We’ve got several insiders within Delphi. It’s bleak. Unless the company gets a turn at the multi-billion dollar federal bailout buffet, Chapter 7 is only a matter of time, and not much of it.

And yes, Delphi still makes enough parts for GM to stop GM making cars if they stop making them. Which doesn’t seem quite as terminal as before, what with Uncle Sugar keeping the cash flowing. Until and unless your legislators pull the plug on GM. And then the whole house of cards will come crashing down.

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