Just four months into her tenure as General Motors CEO, Mary Barra is facing down the auto giant’s biggest crisis since it emerged from bankruptcy in 2009.
The company has recently issued recalls affecting more than 3 million vehicles on five different models from several different years. Some analysts say GM’s legal liability could run to more than $US1 billion, given how much Toyota agreed to pay over its own massive recall.
Despite all this, we don’t think the scale of the crisis has fully sunk in, so we wanted to pull some figures showing just how big a deal this is.
The Friedman Research Corporation says 303 deaths over 10 years can be linked to airbags that failed to deploy on two GM models recalled in February.
The Center for Auto Safety has confirmed those numbers. GM has so far acknowledged at least 12 deaths and 34 crashes, according to Reuters.
GM has been accused of missing a decade’s worth of red flags about the defective parts.
The company has acknowledged learning as early as 2004 of “at least one incident” when a Chevy Cobalt lost power after its key accidentally came into contact with the steering column, according to the Detroit Free Press.
“The truth is they knew they had this recall (coming),” lawyer Shelby Jordan told the Free Press.
Safety advocates and Congress have also criticised the National Highway Transportation Safety Administration for overlooking warning signs.
The Department of Transportation’s inspector general is now investigating how the NHTSA handled the GM recall.
“N.H.T.S.A. claims it did not do an investigation because it did not see a defect trend,” Clarence Ditlow, executive director of the Center for Auto Safety, wrote in a letter to the agency according to The New York Times. But, he added, “In some instances, single complaints can trigger a recall.”
GM has announced a $US300 million charge over the recalls.
Its shares are down 14% YTD. UBS warns in a recent note that Toyota’s federal settlement of $US1.2 billion over a recent recall is likely to serve as precedent for any future action the Justice Department may bring.
The recall is among the largest in U.S. history.
At 3.1 million vehicles, it puts just outside the top 1o biggest recalls.
GM has responded to the crisis by creating an entire new office in charge of investigating the , and Barra released a personal video memo outlying her concerns and commitment to getting out in front of the issue. All of the vehicles named in the recall also ceased production several years ago.
Still, it increasingly appears that there was a glitch not just in cars’ systems, but in the corporate and regulatory oversight required to ensure these things never happen.
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