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General Motors

General Motors (GM) is a US carmaker that was the world’s biggest, although Toyota is challenging it for the title. It was hard hit by the global financial crisis, needing a government bailout, but emerged from chapter 11 reorganisation in 2009, and held an initial public offering in 2010. It returned to profit in 2011.

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Belated car recall first big crisis for GM's new chief

World's No 3 carmaker faces questions as towhy it took 10 years to act on defective vehicles

PUBLISHED : Saturday, 15 March, 2014, 1:54am
UPDATED : Saturday, 15 March, 2014, 1:54am

Mary Barra is facing her first big crisis as the new chief executive of General Motors - the recall of 1.6 million cars sold in North America for defects that have been tied to 13 deaths.

Barra, who took GM's helm in January as the first woman to lead a major carmaker, last week announced an internal review into why the company took nearly a decade to order a recall, promising an "unvarnished" report.

The world's No 3 carmaker is facing two official probes over the issue, one from the National Highway Traffic and Safety Administration, and the other from a powerful congressional committee, asking why GM and the NHTSA were so slow to move after hundreds of complaints.

Chairman Fred Upton said the House Energy and Commerce Committee would hold hearings in the coming weeks.

Upton said he pushed through legislation in 2000 aimed at ensuring carmakers reported and acted on defects before they became a continuing problem.

"Yet, here we are over a decade later, faced with accidents and tragedies, and questions need to be answered," he said.

GM employees already knew in 2004 and 2005 of ignition problems in the Chevrolet Cobalt, according to an official chronology from investigators.

Drivers said the ignition turned off by itself, while they were moving. That would shut down electrical systems, including the safety air bags, as shown in a number of accidents.

Over the years, more reports came in, including links to crashes in which the airbags did not deploy, resulting in sometimes fatal injuries. But it was only last month that any concrete action was taken.

At first, GM announced a recall involving 780,000 cars in the US, Canada and Mexico.

GM said it knew of 22 crashes involving frontal impact where the airbags did not deploy, with six deaths resulting.

The carmaker also said the fatal crashes "occurred off-road and at high speeds, where the probability of serious or fatal injuries was high regardless of airbag deployment".

Just 12 days later the company expanded the recall to 1.6 million cars, saying it had recorded 31 crashes in which the defect might have stopped the airbags from deploying, and 13 deaths.

Barra said in a memorandum to employees: "I deeply regret the circumstances that brought us to this point. We will hold ourselves accountable and improve our processes so our customers do not experience this again."

Barra's transparency recognises the damages the firm faces. In 2009-10, Toyota was forced to recall 12 million vehicles worldwide at a cost of US$2.4 billion.

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