GM responds to safety scandal by recalling 1.5 million more vehicles
In its latest reaction to a mounting safety scandal, General Motors Co. recalled 1.5 million more vehicles and set aside $300 million to pay for repairs.
The move follows the automaker’s apologies over delays in fixing a deadly ignition switch problem. The new recalls — for unrelated issues, mostly involving air bags — stem from a top-to-bottom safety review ordered by GM’s new chief executive, Mary Barra.
GM released a video of Barra’s frank comments to GM employees Monday, hammering home the gravity of the automaker’s mistakes.
“These are serious developments that shouldn’t surprise anyone,” Barra told employees. “After all, something went wrong with our process in this instance, and terrible things happened.”
The recalls announced Monday come as GM faces numerous probes into years of delays in fixing the ignition issue, which has been linked to 12 fatal crashes. Independent safety advocates say the problem could have caused as many as 303 deaths.
GM issued recalls only last month — more than a decade after first learning of the ignition issue, the automaker has acknowledged. The faulty switch could shut off the car while driving, disabling safety systems such as air bags and antilock brakes.
The problem affects 1.6 million cars globally. The models include 2003-07 Saturn Ions, 2006-07 Chevrolet HHRs, 2006-07 Pontiac Solstices, 2006-07 Saturn Sky models, and 2005-07 Chevrolet Cobalt and Pontiac G5 models. The cars all share the same ignition component; none of them remains in production.
The new recalls announced Monday signaled an effort by GM to quickly find and disclose any remaining safety concern, analysts said.
The automaker is “taking action to get all the dirty laundry out,” said David Sullivan, manager of product analysis for the AutoPacific Inc. consulting firm.
Barra called it an “intense review” of the automaker’s recall processes. She vowed swift changes.
“We will be better because of this tragic situation, if we seize the opportunity,” she told employees.
Barra, who was named the automaker’s CEO in January, is pursuing a smart strategy, said Kaitlin Wowak, a University of Notre Dame management professor who researches supply chain risks and disruption.
GM has “an opportunity to show consumers they are willing to take action before consumers are harmed,” Wowak said. “It is also a chance for Mary Barra to show the world what she is made of.”
The ignition switch problem could cost GM dearly and hurt the automaker’s reputation, Standard & Poor’s Rating Services said in a report to investors Monday. GM is on the hook for repairs, fines from government investigations, and civil litigation, the corporate credit rating company said. That’s why the automaker took a charge of about $300 million against first-quarter earnings.
“While more difficult to quantify, we believe reputational effects on GM could reduce the company’s market share or pricing power, even though the company no longer produces the vehicles in question,” Standard & Poor’s said.
But GM has about $28 billion in cash, more than enough to cover any expenses and protect the automaker’s credit rating, the credit rating company said.
The recalls announced Monday include nearly 1.2 million 2008-13 Buick Enclave and GMC Acadia sport utility vehicles, 2009-13 Chevrolet Traverse SUVs and 2008-10 Saturn Outlook SUVs for an air bag problem.
The automaker will repair wiring under the driver’s seat that can crimp and trigger a “service air bag” warning light in the dash. Ignoring the light will eventually disable the driver and passenger seat-mounted side air bags, front center air bag and the seat belt pretensioners, GM said.
Additionally, the automaker recalled 303,000 Chevrolet Express and GMC Savana vans from the 2009-14 model years. The vans don’t comply with a federal safety requirement designed to protect passengers who are not wearing seat belts and who might hit their heads on the instrument panel in a crash. The material on the instrument panel is too hard. GM will replace it with material that softens the blow.
GM also recalled 63,900 Cadillac XTS sedans from the 2013 and 2014 model years. A corrosion problem in the brake booster electronics could trigger an engine compartment fire, the automaker said. GM knows of two engine compartment fires in unsold vehicles at dealerships and two cases of melted components.
Drivers of cars with the ignition problem won’t be able to get their cars fixed for months. Production of the replacement part won’t start until next month, and it will take until October to produce all the new switches needed to fix the recalled cars, GM officials said.
The National Highway Traffic Safety Administration and GM have come under heavy fire from lawmakers and safety advocates for not acting sooner. The Department of Justice and committees in the U.S. House and Senate have opened investigations in the matter. GM will probably face at least a $35-million civil fine.
Twitter: @latimesjerry
