Bloomberg News

Better GM Data Would Have Prompted Probe, NHTSA Chief Says (1)

March 31, 2014

General Motors Co. CEO Mary Barra

Mary Barra, chief executive officer of General Motors Co., speaks during the GM 2015 GMC Canyon truck unveiling ahead of the 2014 North American International Auto Show in Detroit, Michigan. Photographer: Andrew Harrer/Bloomberg

The top U.S. auto regulator probably would have investigated ignition-switch failures linked to 13 deaths had General Motors Co. (GM:US) provided better information, the agency’s acting administrator said.

In remarks prepared for his testimony tomorrow before a U.S. House committee, David Friedman of the National Highway Traffic Safety Administration said newly provided information “likely would have changed NHTSA’s approach to this issue.” For her part, GM Chief Executive Officer Mary Barra plans to tell Congress she’s committed to discovering why it took so long to recall 2.6 million vehicles linked to the 13 deaths.

“Sitting here today, I cannot tell you why it took years for a safety defect to be announced in that program, but I can tell you that we will find out,” Barra said in her prepared remarks. “When we have answers, we will be fully transparent with you, with our regulators, and with our customers.”

The pair’s comments were posted today on the House Energy and Commerce Committee’s website.

Barra, who became CEO in January, is being asked to explain the handling of years of complaints linked to faulty ignition switches in the Chevrolet Cobalt and other cars. The switches, when jostled out of position, led to stalling cars and disabled air bags, GM has said. Lawmakers want to know why GM, though aware of the ignition breakdowns in 2001, didn’t recall the cars earlier.

New Recall

Separately today, GM said it will recall 1.51 million cars globally, including 1.3 million in the U.S., that may experience a sudden loss of electric power-steering assist.

The new recalls includes some model years of the Cobalt and another car tied to the ignition-switch recall, the Saturn Ion. Other cars include various model years of the Pontiac G6, Chevrolet Malibu and Malibu Maxx; the non-turbocharged Chevrolet HHR and Saturn Aura.

Depending on the vehicle, GM said it will replace components including the steering column and the power steering motor, and reimburse customers who previously had those parts replaced.

The automaker said it will take a $750 million charge, $300 million of which was previously announced, in the first quarter to cover costs of recall repairs. The added recalls bring GM’s global total for this year to about 6.6 million vehicles.

GM fell (GM:US) 0.9 percent to $34.42 at 4 p.m. in New York before the power-steering recall was announced.

‘New Standard’

“With these safety recalls and lifetime warranties, we are going after every car that might have this problem, and we are going to make it right,” Jeff Boyer, vice president of global vehicle safety, said in an e-mailed statement. “We have recalled some of these vehicles before for the same issue and offered extended warranties on others, but we did not do enough.”

GM is aware of some crashes and injuries, though no fatalities, linked to the loss of power-steering assistance, Alan Adler, a GM spokesman, said today in an e-mailed statement. “GM is continuing to analyze this data,” he said.

NHTSA backed off doing an investigation into the ignition switches in 2007 because of the murkiness of circumstances surrounding some Cobalt crashes, the agency’s acting administrator, Friedman said in his written testimony.

Some incidents involved unbelted occupants and off-road, long-duration events in which it couldn’t be determined that the air bag should have deployed, Friedman said.

‘Major Weaknesses’

NHTSA’s Office of Defects Investigation had “major weaknesses” in identifying which potential cases to pursue in 2011, according to written testimony by Calvin Scovel, the Department of Transportation’s inspector general, for a Senate hearing scheduled for April 2.

Most NHTSA investigation decisions are based on consumer complaints, and the agency handled information inconsistently, didn’t document decisions and hadn’t effectively assessed its workforce, the 2011 audit said. The agency responded to all of the inspector general’s criticisms except workforce assessment by the end of 2012, Scovel said.

In her written remarks, Barra reiterated apologies to people affected by the recall, saying she was “deeply sorry.”

“I would like this committee to know that all of our GM employees and I are determined to set a new standard,” Barra said. “I am encouraged to say that everyone at GM -- up to and including our board of directors -- supports this.”

Unaware CEOs

Barra may be asked to respond tomorrow to fresh indications that the automaker decided it would be too expensive to fix the flawed ignition switches. After months of studying ignition-switch failures in the Chevrolet Cobalt, GM canceled a proposed change in 2005, when a project engineering manager cited high tooling costs and piece prices, according to documents obtained by U.S. congressional investigators.

Questions also may include why the engineering manager came to that decision, who decided to make the parts alterations anyway, and why CEOs before Barra weren’t made aware of the issues.

Barra has said she was told about an analysis of stalling cars in December and was informed on Jan. 31 of the decision by a GM committee to recall Chevrolet Cobalts and other small cars with the faulty switch. The first recall came Feb. 13 and has been expanded twice since then.

“As soon as I learned about the problem, we acted without hesitation,” Barra said in her remarks. “We told the world we had a problem that needed to be fixed. We did so because whatever mistakes were made in the past, we will not shirk from our responsibilities now and in the future. Today’s GM will do the right thing.”

Slow Response

GM has recalled about 2.6 million cars following the revelations about the ignition flaw in February. Last week, it added 559,000 trucks and 200,000 Cruze compact cars to the recall for different safety issues.

Barra, 52, ran GM’s product development prior to becoming CEO. She has apologized for the slow response that resulted in deaths.

GM has hired an outside investigator to probe the delay and 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 taxpayer-funded bailout in 2009.

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 a background memo the House committee’s staff prepared for lawmakers.

No Investigation

NHTSA chose not to open a formal defect investigation in 2007 after reviewing the air-bag data, Friedman said in his testimony.

“The available data did not indicate that the Cobalt or Ion were overrepresented compared to other peer vehicles with respect to injury-crash incident rates,” Friedman said.

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, according to the House memo. For a second time, the agency backed off after further reviewing data.

To contact the reporters on this story: Tim Higgins in Washington at thiggins21@bloomberg.net; Jeff Plungis in Washington at jplungis@bloomberg.net

To contact the editors responsible for this story: Bernard Kohn at bkohn2@bloomberg.net Michael Shepard


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