General Motors' announcement that it is recalling more than one million vehicles has gotten attention from Congress, sparked investigations, and may pose a formidable challenge for the company's fresh CEO. Here's what you need to know:
What’s the problem and when did it start?
In total, GM has recalled about 1.6 million autos for an ignition switch problem it has blamed for 31 accidents that caused 12 deaths. The problem is that the ignition could turn from the On position to the Off or ACC position inadvertently if jostled or by having too many keys on a keychain. That could cause the car to stall, stopping the airbags from deploying. The recall covers about 1.4 million vehicles in the United States and the remainder mostly in Canada and Mexico. The automaker announced the recall on Feb. 13, which it then expanded on Feb. 25. The recall covers model years (see below) stretching back for a decade.
Which models were recalled?
GM recalled the 2005-2007 Chevrolet Cobalts, Pontiac G5, and Pontiac Pursuit. Also recalled were the 2003-2007 Saturn Ions, the 2006-2007 Chevrolet HHRs, 2006-2007 Pontiac Solstice, and 2007 Saturn Sky.
What’s GM doing about it?
The company has begun questioning its employees about the ignition switches, two unidentified sources told Reuters. It has provided the National Highway Traffic Safety Administration (NHTSA) with information including a chronology of events going back about a decade before the recall. GM has also set up a website dedicated to the ignition switch issue, and on Wednesday told drivers to avoid attaching any additional objects to the ignition key.
Who’s investigating GM and why?
Lots of people. The Justice Department and Congress want to know why it took GM so long to get around to recalling the vehicles. The Transportation Department will probe whether GM was slow in reporting the problem to the NHTSA, Transportation Secretary Anthony Foxx said on Thursday. Senator Claire McCaskill said a Senate subcommittee will hold a hearing to “get to the bottom of this.” A House of Representatives subcommittee sent a letter to GM requesting more information regarding customer complaints before the end of March. Last week, NHTSA sent GM a strongly worded document with 107 questions it wants answered by April 3.
What does this mean for GM chief executive Mary Barra?
As investigators work to figure out who at GM knew what and when, it’s likely that none of GM’s top execs, including Barra, will avoid close scrutiny. Tasked with continuing GM’s recovery from bankruptcy, Barra had only been in her new job for about two months when the recall was announced. “The vehicles we make today are the best in memory and I’m confident that they will do fine,” Barra wrote a letter to company employees on March 4. “While I deeply regret the circumstances that brought us to this point, I appreciate how today’s GM has responded so far.” GM has hired outside firms to help with the investigation.
How will GM’s bankruptcy and bailout affect this?
It’s not entirely clear yet. At the crux of that will be whether the new-GM, which emerged from bankruptcy protection in July 2009, can be held liable for products made by the old-GM. The terms of GM’s restructuring may prevent that. Anyone wanting to sue GM over the ignition problems may have to go after the old GM, which could prove difficult. It may also be covered by Statutes of Limitations, according to the Center for Auto Safety.“It is true that new GM did not assume liability for claims arising from incidents or accidents occurring prior to July 2009,” GM said in a statement issued March 7. “Our principle throughout this process has been to put the customer first, and that will continue to guide us.”Lawyers for crash victims or their families are likely to do their best to chip apart that argument.
CNBC and The Detroit Bureau contributed to this report. The Associated Press and Reuters also contributed.
First published March 13 2014, 2:00 PM