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GM’s Recall Is Just the Beginning GM’s Recall Is Just the Beginning

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Transportation Insiders

GM’s Recall Is Just the Beginning

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General Motors headquarters in Detroit. STAN HONDA/AFP/Getty Images

These are rough times for General Motors. The company is recalling some 1.6 million vehicles in order to replace their ignition switches. It is under criminal investigation by the Justice Department. CEO Mary Barra has already apologized for at least eight deaths that have occurred as a result of the faulty switch, which deadens the engine and disables the airbag. Her testimony in front of Congress this week will only amplify and repeat (and repeat) those apologies.

If past is predicate, this is only the beginning. In 2010, Toyota President Akio Toyoda spent hours before Congress trying to explain how his company had addressed (some say ignored) reports of its accelerator pedals getting stuck in the floor mats. The "sticky pedal" problem led to the death of a family of four in San Diego. When Toyoda finally had to face an angry Congress, it seemed there wasn't enough ways for him to say, "I'm sorry."

 

The Toyota debacle is only just now coming to an end, with the company paying a whopping $1.2 billion to settle a class action lawsuit. It is one of the largest settlements in automotive history. Even though Toyota admitted no unlawful conduct, it did admit to concealing facts about the safety of its vehicles from the public. Toyota may have avoided criminal liability, but the statements about the case from the FBI and the Justice Department are embarrassing, to say the least.

This is likely what GM can look forward to. If its executives are smart, they will make some highly public changes to their engineering practices and their overall business model. If nothing else, they will need to address a damning report from Automotive News that says GM engineers quietly changed the ignition switch in 2006 with little or no documentation, leaving older models at risk and GM investigators at a loss to understand the problem.

GM can now expect scrutiny in every corner of its operations. In the Toyota case, then-Transportation Secretary Ray LaHood went so far as to tell Toyoda that he needed to alter his board of directors to include Americans.

 

"When Mr. Toyoda came to meet with me, I said, 'What percent of cars do you sell in America?' He said, 'Sixty percent.' I said, 'How many Americans do you have on your board?' He said, 'None.' I said, 'You know, you really need to think about that if you're selling the lion's share of your cars to us and you're dealing with our safety agency,'" LaHood told me in a recent interview. "

"They ultimately put an American on their board. They changed their business model. They paid their fines. They never complained about it," LaHood added.

It's a dreary outlook for the next few years for GM.

For our insiders: How effective is the oversight conducted by the Transportation Department in this kind of vehicle safety? How effective are the investigations by the Justice Department? What role, if any, should Congress play in the inquiry? Are the laws governing vehicle safety tough enough? Do they need to change? What is the most likely outcome of the GM case?

 

(Note: This is a moderated discussion on transportation issues. Comments are approved on a case-by-case basis. Contact me if you want to be a regular commenter.)

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