GM drivers remain loyal in spite of controversy surrounding recall of ignitions

While American carmaking giant General Motors slogs through a huge and expensive programme to replace ignition switches in millions of its cars built over the last decade, consumers shopping for cars today seem to be shrugging with indifference as they flock to the company's dealers to buy new cars.

The ignition switch recall covers 2.6 million cars built from 2003 until 2011. The company is installing replacement switches that are harder to turn from the “on” position to the “accessory” position. It has emerged that some cars that have crashed had their switches moved to “accessory,” which deactivates the cars’ airbags.

In some cases those cars may have crashed because the car struck a bump that caused the ignition to switch the engine off, while in others the impact of leaving the road and crashing over a curb or through a ditch may have turned the key off prior to the major impact. In either case, the airbag failed to deploy in at least 13 crashes in which vehicles’ occupants died.

Initially, only the 2003-2007 cars were included because those were the only ones built with the defective part. But because, contrary to the company’s policy and industry practice, the ignition cylinder design was improved to solve the problem without changing its part number, GM concluded that it had no way of confirming whether later 2008-2011 editions of affected models may have had the flawed switches installed during subsequent repair work. The solution was to add all of those cars to the list.

Testimony to the Congressional committee investigating this recall revealed that an internal pre-production report on the Saturn Ion identified a propensity for the car’s ignition switch to turn the car off if jostled by the driver’s knee and that GM nevertheless approved production of the faulty ignition cylinder even though it was found not to meet the company’s specifications for the force needed to make it switch off.

By 2004, GM opened an engineering inquiry into reports that the cars were switching off while driving, but in 2005 the company opted to take no action because of the potential cost of recalling and repairing all the cars using the suspect switch.

In July 2005 a motorist in a Chevrolet Cobalt was killed in a crash during which the airbag failed to deploy. Investigation showed the key was turned to the “accessory” position.

In 2006 the design engineer – who was subsequently fired – responsible for ignition switches signed an order to upgrade the switch to require higher turning force.

However, a 2007 investigation by GM, the National Highway Traffic Safety Administration (NHTSA), and Indiana University into the failure of airbags to deploy in crashes of the affected cars failed to pinpoint the ignition switch turning off as the cause.

Design change

By 2012 GM’s safety engineers tested 44 of the cars and found that the effort to turn the switch was too low, but were puzzled by the fact that 2008-later models didn’t have the same problem. In late 2013 the ignition switch supplier, Delphi, gave GM documentation of the 2006 design change that was implemented for 2008 models. In January 2014 GM announced the recall of the cars.

The company’s new-car sales have remained strong despite the recall. In its July sales report for the US, GM announced that its sales were up 9 per cent compared to a year ago and that average transaction prices – the prices customers actually pay for the cars they buy – rose by more than $2,000 per vehicle compared to a year earlier. The Buick brand posted its best July sales since 2006.

A survey by researchers at Kelley Blue Book (KBB) revealed that half of consumers surveyed think GM is a “new company” compared to five years ago, while a quarter is unsure and another quarter disagrees.

Correspondingly, 39 per cent of consumers said they think GM is making more reliable vehicles than five years ago, while 32 per cent disagree and 29 per cent said they were unsure.

“General Motors CEO Mary Barra has successfully positioned the brand in a positive light, as evidenced by Kelley Blue Book’s survey results showing half of new-car shoppers think GM has changed in recent years,” said Tony Lim, director of research for KBB. “By reinforcing the message of the ‘new’ GM and distancing itself from the ‘old’, Barra can continue to effectively distinguish the company from its past.”

That doesn’t mean that car buyers have given GM a free pass, only that the company’s efforts to address the problem seem satisfactory.

‘Quality and reliability’

“High-profile recalls will put pressure on views of quality and reliability for any brand, and while many consumers think GM is a different company today, inevitably perceptions of product unreliability still exist,” said Lim. “GM can overcome these challenges and change perceptions by focusing efforts on new-vehicle launches and commitment to innovative in-vehicle technology.”

The scope of the recall, large as it is, has been exaggerated by the company’s subsequent decision to revisit any niggling problem that may have plagued any of its models and recall them as a precautionary step, pointed out Michelle Krebs, senior analyst for AutoTrader.com. “There have been recalls on a lot of GM vehicles because GM has been going through [their catalogue] with a fine tooth comb so, if it is even slightly questionable, they are doing a recall,” she said.

Some of the additional recalls are also for ignition switch concerns, though GM insists that those problems are unrelated to the infamous compact car recall underway. Indeed, since this recall became news, other manufacturers – including Harley Davidson – have recalled their vehicles for similar concerns.

The company discovered concerns with the ignition switches in some of those mid-size cars as early as 2003, but as with the compact cars, it did not announce a recall for them at that time.

While consumers’ magnanimity to GM’s current vehicles may be understandable, perhaps surprisingly, consumers also seem to trust the repaired cars too. “We have not seen a decline in resale prices even on some of the vehicle that have been recalled,” Krebs noted.

This could deflate efforts to sue the company for perceived loss of resale value due to the recalls.

Even many of those driving the affected cars are indifferent to the recall. After the Delphi assembly plant that makes the switches quickly tooled up to resume their manufacture to meet the recall’s requirements, demand quickly slacked off as consumers apparently forgot about the recall and moved on to worrying about crashed airliners and football.

By early August, 700,000 of the 2.6 million cars had been repaired and GM now has a surplus of the parts ready for customers, according to spokesman Alan Adler. To inform and reach those customers, the company has mailed numerous letters to the registered owners of all the recalled cars, first informing them of the recall, then urging them to make an appointment to have the replacement parts installed free of charge.

Key ring safety

The company also urged owners of unrepaired cars to remove other keys or objects from the key ring containing the cars’ ignition keys because tests revealed that added weight to the key ring substantially increases the potential for the switch to change position.

Local dealers also called owners directly to arrange appointments for cars that haven’t been repaired. Getting owners of the almost two million remaining cars to bring the cars in for repair may prove to be a tough obstacle, now that those drivers who were concerned about it have had their cars fixed.

An August 7th letter from Barra to owners explained that the company would complete manufacture of enough repair parts for all the cars by October, but many of them will not be installed if owners don’t bring the cars in.

GM has created a fund to compensate owners who have been injured or whose loved-ones died in cars whose airbags failed to deploy

Payouts to victims’ families will be $1 million for the victim, plus $300,000 each for any surviving spouses or children. GM says it has not capped the total it will pay, so the final bill is unknown. Injury payouts range between $20,000 for a single overnight hospital stay, up to $500,000 for victims who ended up in hospital for a month.

But the bigger cost is likely to come in criminal court, where the US Department of Justice will pursue a case against the company for failing to convey information about the cars’ shortcomings to the government in a timely fashion.

Toyota’s fine for its foot-dragging and obfuscation in the case of accelerator pedal entrapment by floor-mats was $1 billion, Krebs pointed out.

Today’s GM executives insist that knowledge of the problem never rose above low- and mid-level employees who were subsequently fired, and that the company never endorsed a strategy of hiding the problem. In congressional testimony, Barra described the reasons for their termination including misconduct, incompetence, failure to take responsibility, and failure to act with urgency.

The final conclusion will be decided in court.