GM’s recalls of 20 million cars signals “sea change;” will it last?

McClatchy Washington BureauJune 18, 2014 

— _ The scandal over General Motors’ years-long failure to recall Chevy Cobalts and five other models with ignition switch defects, now blamed for at least 13 fatalities, has helped create “a sea change” in the auto industry – at least for now, a leading industry watchdog said Tuesday.

But the big carmakers are only likely to persist in a sudden outpouring of safety defect mea culpas if they’re threatened with penalties such as the $1.2 billion in criminal fines that the Justice Department slapped on Toyota Motor Corp. this spring over its concealment of deadly acceleration problems, said Clarence Ditlow, executive director of the Center for Auto Safety.

GM now faces a similar department criminal inquiry.

The latest evidence of a culture change at the Detroit automaker was its voluntary move to fix another 3.16 million U.S. cars – these including 2005 and 2011 Cadillacs, not economy cars -- on Monday due to the discovery that more ignition keys could abruptly slip from the “on” position if they were attached to heavy key rings. Last week, GM recalled a half million Chevrolet Camaros with similar problems.

Since GM first announced problems with models of its Cobalts, Saturns and Pontiacs in late February, the company has recalled a staggering 20 million cars sold in North America due to safety defects big and small. To put that in perspective, GM sold about 9 million cars worldwide last year.

On Wednesday, the independent investigator whom GM chief executive Mary Barra brought in to examine why it took more than a decade for the company to rectify a life-threatening problem with ignition switches will join Barra in testifying before a House Energy and Commerce Committee panel about his findings. The internal investigator, Anton Valukas, a former U.S. attorney for Chicago, found no high-level cover-up, but rather a culture that put profits before safety.

Ditlow, in a letter to Valukas on the eve of the hearing Tuesday, accused him of “constructing what amounts to a corporate defense against criminal charges.”

Ditlow asserted that Valukas’ report failed to adequately focus on the company’s 2,039 Early Warning Reporting death and injury reports to the government about the recalled vehicles -- “the single largest repository of information ... on real world ignition switch related deaths, injuries and crashes at GM.” Further, he said that Valukas report repeatedly omitted evidence showing that in the past, GM’s upper management had considered it a safety defect when a car stalled, because it could happen while in motion, as allegedly occurred in the fatal crashes, complicated further when the ignition shutoffs prevented airbags from deploying to protect passengers.

“The constant theme throughout your report is that stalling is not a per se safety defect,” wrote Ditlow, who has watched over the industry for over 40 years.

Much is at stake for GM as Barra tries to wipe the slate clean of bad news and polish up the already tarnished image of what she calls “the new GM.” With the release of Valukas’ report on June 5th, Barra sacked 15 employees, including engineer Ray DeGiorgio, who authorized a redesign of the Cobalt ignition key in 2007 without changing the part number.

Valukas found that DeGiorgio did not seek authority from above for that decision, which made it more difficult for consumers to trace the original problem.

The National Highway Traffic Safety Administration, which imposed the maximum $35 million fine on GM, has directed the company to provide monthly updates on possible safety defects.

Under Jeff Boyer, whom Barra named to the newly created post of vice president for global vehicle safety and who reports directly to both her and the company’s board of directors, the company has adopted a new internal slogan, “Speak up for Safety.”

Boyer told the committee’s staff last month that GM also plans to bring in new capabilities, including data analytics, to spot emerging safety trends.

GM spokesman Alan Adler said Tuesday that a search for ignition switch problems across all of the automaker’s product lines is “substantially finished, but don’t believe that we’ll stop looking.”

Senior leadership, he said, is “not necessarily waiting for a defect trend. Ten out of the 44 recalls this year are for 1,000 vehicles or less.”

Ditlow said he believes that GM is working frantically to avoid the same fate as Toyota, which admitted in the first-ever U.S. criminal case against a major automaker that it concealed from the public two problems causing its Lexus and other models to zoom forward at full throttle.

“They’re cleaning house, just like Toyota cleaned house,” Ditlow said. “But (Toyota) didn’t avoid it. And I don’t expect GM to, either.”

He said that “as long as the Justice Department is willing to continue prosecuting these cases, the industry is going to be on better behavior.”

But over the long run, he said, the industry is likely to revert to its old ways unless Congress grants NHTSA the “teeth” to fine automakers more than $35 million, which he said is “petty cash” to a company like GM.

“The ultimate proof is what GM does three years from now,” Ditlow said, “not what they do within the first three months to a year after the ignition switch scandal.”

Email: ggordon@mcclatchydc.com; Twitter: @greggordon2.

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