Bloomberg News

GM Canceled Ignition-Switch Fix in 2005 Due to Costs

March 31, 2014

General Motors Ignition

A Chevrolet Cobalt in Monrovia, California. Photographer: David McNew/Getty Images

General Motors Co. (GM:US), after months of studying ignition-switch failures in the Chevrolet Cobalt, canceled a proposed fix in 2005, when a project engineering manager cited high tooling costs and piece prices, according to documents obtained by U.S. congressional investigators.

A separate opportunity to address the defect was passed over by the National Highway Traffic Safety Administration in 2007, when it opted not to open a formal defect investigation even after an agency official had said a probe was justified, according to an interview between current NHTSA officials and staff members of the House Energy and Commerce Committee.

Those decisions and this year’s recall of 2.6 million small cars for faulty ignition switches are set to be the main focus of congressional hearings tomorrow and April 2. GM Chief Executive Officer Mary Barra and acting NHTSA Administrator David Friedman are being asked to explain the handling of years of complaints about stalling cars and disabled air bags that have now been linked to the switches and tied to 13 deaths.

“Lives are at stake, and we will follow the facts where they take us as we work to pinpoint where the system failed,” Representative Fred Upton, the chairman of the House Energy and Commerce Committee, said in a statement yesterday.

GM opened an engineering inquiry about the Cobalt ignition switch in November 2004, after customers complained the engine “can be keyed off with knee while driving,” according to a problem-tracking system document obtained by House investigators. Four months later, the Cobalt project engineering manager rejected a key slot change, citing cost and long lead times.

“None of the solutions presents an acceptable business case,” according to a GM memo cited by the House committee.

‘Early Warning’

The chief of NHTSA’s Defects Assessment Division e-mailed other officials in the Office of Defects Investigation in September 2007, saying owner complaints from 2005 and “early warning” data about warranty repairs and injuries justified a probe, according to the memo from the committee.

“Notwithstanding GM’s indications that they see no specific problem pattern, DAD perceives a pattern of non-deployments in these vehicles that does not exist in their peers,” the official said, according the memo issued before a committee hearing on vehicle defects.

NHTSA chose not to open a formal defect investigation in 2007 after reviewing the air-bag data. In 2010, after a special crash investigation report was filed with NHTSA about a May 2009 Cobalt crash, the agency again considered a defect probe focused on the car’s air bags. For a second time, the agency backed off after further reviewing data, according to the memo.

‘At Stake’

Barra and Friedman are scheduled to appear before Upton’s committee tomorrow, and a Senate committee on April 2.

“As we have stated previously, the agency reviewed data from a number of sources in 2007, but the data we had available at the time did not warrant a formal investigation,” a NHTSA spokesman, Nathan Naylor, said. “Recent data presented by GM provides new information and evidence directly linking the ignition switch to the air-bag non-deployment. That’s why we are aggressively investigating the timing of GM’s recall.”

The ignition-switch defect in six GM models including the Cobalt and Saturn Ion has been linked to the deaths in at least 31 crashes. GM recalled about 1.6 million cars worldwide in February, and an additional 971,000 last week.

“We deeply regret the events that led to the recall,” a GM spokesman, Greg Martin, said in an e-mailed statement. “We are fully cooperating with NHTSA and the Congress, and we welcome the opportunity to help both have a full understanding of the facts.”

Barra’s Leadership

GM approved production of the ignition switch in 2002 even though testing showed torque in the part fell short of the company’s original specifications, the part’s supplier, Delphi Automotive Plc, told House investigators.

The congressional hearings present a test of leadership for Barra, who took over as GM’s first female CEO on Jan. 15 and said she first learned the details of the recall two weeks later. Barra and other top executives are trying to remake the image of the Detroit-based automaker after last year shedding the final vestiges of U.S. government ownership linked to its 2009 bankruptcy.

Barra has apologized for the slow response that resulted in deaths. GM has also hired an outside investigator to probe the delay and has created a vice president position in charge of global vehicle safety, as Barra has sought to shore up GM’s image and reinforce the automaker’s message that it’s recreating itself after its $50 billion taxpayer-funded bailout.

Firestone, Ford

Upton has said he wants to know why regulations already in place didn’t catch the GM problems sooner. Upton led the probe in 2000 over highway deaths linked to Firestone tires on Ford Motor Co.’s Explorer sport-utility vehicles.

Upton, 60, was the lead House author of the Transportation Recall Enhancement, Accountability and Documentation Act, or Tread Act. The 2000 law boosted communication between carmakers and the government and increased NHTSA’s ability to collect data, with automakers required to report more potential threats such as defect claims or lawsuits, and recalls in other nations.

“The Tread Act was supposed to keep folks safe and prevent this very situation,” Upton said in the statement. “We now know the problems persisted over a decade, the red flags were many, and yet those responsible failed to connect the dots.”

To contact the reporter on this story: Jeff Plungis in Washington at jplungis@bloomberg.net

To contact the editors responsible for this story: Bernard Kohn at bkohn2@bloomberg.net Romaine Bostick, Jamie Butters


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