Bloomberg News

GM Recalls Half a Million Camaros on Possible Power Loss

June 13, 2014

Chevrolet Camaro

The Chevrolet 2014 Camaro vehicle sits on display at the company's booth during the 2013 New York International Auto Show in New York, U.S., on Thursday, March 28, 2013. Photographer: Jin Lee/Bloomberg

General Motors Co. (GM:US), in trying to resolve a recall of 2.59 million older cars related to loose ignition switches, found that it also needs to fix the key design on more than 500,000 late model Chevrolet Camaros.

The driver’s knee can bump the key and cause the ignition to move out of the “run” position leading the car to lose power, GM said in a statement today. GM, the biggest U.S. automaker, said it’s aware of three crashes that resulted in four minor injuries that may be attributed to this condition.

While the Camaros represent vehicles made after the 2009 GM restructuring, the ignition-key design dates back further, said Jake Fisher, director of automotive testing at Consumer Reports. Parts designed by pre-bankrupt GM are still in wide use, a pitfall for a company trying to get a handle on a record number of recalls this year that has surpassed 16 million vehicles.

“If there is something alarming here, it’s that there are plenty of old GM designs running around the brand new cars at the dealership,” Fisher said in an interview.

GM is stepping up the pace of recalls as it faces multiple probes for its slowness in recalling small cars linked to at least 13 deaths. The carmaker this month released the results of an internal probe into that February recall which blamed a lack of urgency in GM’s engineering and legal department in dealing with problems, though found no conspiracy to hide facts.

‘New Norm’

“Discovering and acting on this issue quickly is an example of the new norm for product safety at GM,” Jeff Boyer, vice president of global safety for the Detroit-based automaker, said in the statement today about the Camaro recall.

The company said 511,528 Chevrolet Camaros from the 2010 to 2014 model years, with 464,712 of those in the U.S., are affected.

GM rose (GM:US) 0.3 percent to $35.63 at the close in New York. The shares have fallen 13 percent this year.

GM will change the Camaro key to a standard design from one in which the key is concealed in the fob and is opened by pushing a button. The change will separate the ignition key from the fob, so that inadvertent contact won’t move the key out of the “run” position, GM said.

Saab Recall

The Camaro defect was discovered as the company did tests following the recall of 2.59 million Chevy Cobalt, Saturn Ion and other small cars for a flawed ignition switch. The Camaro’s ignition system meets GM’s engineering specifications and is unrelated to the ignition system used in the small cars covered by the ignition-switch recall, GM said.

Customers will receive letters letting them know when they can bring the cars to a dealership for the free repairs.

Separately, GM announced three smaller recalls: the 2004-2011 Saab 9-3 convertible to fix a seat-belt retractor, covering 28,789 U.S. cars; 21,567 2012 Chevy Sonics, to fix a fractured transmission turbine shaft; and the 2014 Buick LaCrosse, for a driver’s door wiring repair in 14,765 cars.

With the four actions announced today, GM will have recalled 14,401,773 vehicles in the U.S. this year, and 16,488,514 in North America.

The new recalls aren’t likely to have a big market impact on GM, which has weathered months of bad publicity over the Cobalt ignition-switch recall while posting strong sales, said Jack Nerad, executive market analyst at Kelley Blue Book in Irvine, California.

Sales Effect

“It’s remarkable how disconnected the buying public is from this story,” Nerad said. “It doesn’t seem to have affected sales at all.”

GM in May had its best month of U.S. auto sales since August 2008, rising 13 percent to 284,694 vehicles. In April, it reported first-quarter net income, despite $1.3 billion in recall-related costs. Those gains suggest consumers are separating new models on the lot from the older small cars that are part of the ignition-switch recall.

The company last month agreed to pay a $35 million fine as part of the U.S. Transportation Department’s investigation into how it handled the February small-car recall. GM has also added about 35 investigators as it shows a willingness to take vehicles off the road for a variety of issues.

In April, Chief Executive Officer Mary Barra was called before Congress to explain why the company took years to publicize the faulty ignition switches. Since then, GM has told owners of millions more vehicles to bring their cars to dealers for repairs to shift cables, seat belts and other parts.

Barra is scheduled on June 18 to make a second public appearance before the House Energy and Commerce Committee.

Internal Probe

While Barra herself was held blameless in the company’s own investigation, she dismissed 15 employees for their roles in the incident. That probe was led by Anton Valukas, chairman of law firm Jenner & Block LLC, who served as a Justice Department-appointed examiner of the downfall of Lehman Brothers Holdings Inc.

GM’s total recall number for the year exceeds the 10.7 million-vehicle mark it set in 2004, according to the U.S. National Highway Traffic Safety Administration. By comparison, Americans are expected to buy 16.1 million new cars and trucks this year, according to the average of analyst estimates compiled by Bloomberg.

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

To contact the editors responsible for this story: Romaine Bostick at rbostick@bloomberg.net; Jamie Butters at jbutters@bloomberg.net Elizabeth Wasserman


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