GM moved faster to fix larger cars

By Nick Bunkley, Crain News Service

DETROIT (July 29, 2014) — General Motors Co. treated isolated reports of flimsy ignitions in its mid-sized, full-sized and luxury cars more urgently than similar but far more voluminous complaints about the less profitable Chevrolet Cobalt and Saturn Ion, documents GM submitted to federal regulators show.

The documents also reveal more instances when GM quietly redesigned ignition switches without issuing a recall or removing the old parts from circulation. The newly disclosed cases, which predate the Cobalt problems, involve the same, now-fired engineer who was responsible for the Cobalt switch, Ray DeGiorgio.

The documents—chronologies related to two recalls announced June 30 covering 7.2 million Chevrolets, Pontiacs, Cadillacs and Oldsmobiles—show that engineers approached inadvertent vehicle shutoffs as a more serious concern in those cases. They quickly implemented a solution even though there were no crashes and no evidence that the problems were widespread.

In 2003, Mr. DeGiorgio approved a redesigned ignition switch just months after a Michigan customer with “approximately 50 keys and a set of brass knuckles” attached to a Pontiac Grand Am ignition key demonstrated that the car could shut off if driven over a speed bump at more than 30 mph. Though a dealership was unable to replicate the problem, the complaint was deemed serious enough for the Grand Am's quality brand manager to meet personally with the customer.

A GM spokesman, Alan Adler, last week described the redesign as “more routine” than what happened with the Cobalt, though he couldn't provide further details on why it occurred.

“It wasn't because of anything that was seen as a safety issue,” Mr. Adler said. “Part changes are not unusual.... Engineers are constantly working on a vehicle. They don't just launch and then stop.”

In early 2004, GM said Mr. DeGiorgio approved modifying the switch used in the Pontiac Grand Prix—which shared parts with the Grand Am—without changing the part number. CEO Mary Barra has said Mr. DeGiorgio's decision not to change the part number when redesigning the Cobalt ignition switch in 2006 was a violation of “Engineering 101.”

Later, GM redesigned the switch used in the Cadillac CTS and SRX after some employee test drivers accidentally turned off the ignition with a knee while driving “competitively.” Neither the chronologies nor documents from the supplier, Delphi Automotive, cite any customer complaints as a factor, and the National Highway Traffic Safety Administration (NHTSA) does not show any complaints about stalling filed by CTS or SRX owners before the change was made.

Meanwhile, a different set of engineers classified stalling in the Cobalt and Ion as merely an inconvenience to drivers, refusing to spend time or money on a fix, as complaints piled up for years.

Although an internal investigation concluded that no GM employees knowingly compromised safety to save money, the new revelations suggest that those involved with the Cobalt program were more loath to raise costs even by a small amount than the teams working on larger, more expensive vehicles. Previously disclosed documents pegged the cost of modifying the Cobalt switch to be less than a dollar per vehicle.

“There was no profit on it,” Dave Sullivan, manager of product analysis at AutoPacific, said of the Cobalt. “Any expense would come under the microscope if it would have an impact on profitability.”

The documents provide more evidence that lack of communication among GM's various departments and vehicle programs allowed the Cobalt problem to go unresolved even after the Grand Am switch was improved.

‘Distinct differences'

The newly disclosed switch redesigns and other recently released documents could give NHTSA evidence to support more fines against GM if officials conclude the company knew problems were safety-related but delayed fixing them. GM already paid a record $35 million fine for its handling of the Cobalt recall, the maximum allowed per violation, and Transportation Secretary Anthony Foxx, who oversees NHTSA, is among those in Washington who have said the fine should have been larger.

A NHTSA spokeswoman declined to discuss whether the agency might open any more investigations of GM, but the agency says it looks into the timeliness of all recalls and would take action upon seeing evidence that an auto maker waited too long.

Despite similarities revealed by the chronologies, Ms. Barra said during a Senate subcommittee hearing in July that there were “distinct differences” between the company's mishandling of the Cobalt recall and the circumstances surrounding four ignition-related recalls affecting 11 million vehicles in June.

Sen. Richard Blumenthal, D-Conn., urged Ms. Barra to include those vehicles in a compensation plan for deaths and injuries linked to the Cobalt defect. But Ms. Barra said the Cobalt situation involved “very specific issues—a series of mistakes that were made over a long period of time.”

As with the Cobalt, GM waited until this year to issue a recall in connection with the Grand Am and SRX ignition switch redesigns. The Grand Am recall, which also includes the Chevrolet Impala and five other nameplates, came a month after a NHTSA official forwarded a 2003 technical service bulletin to Brian Latouf, GM's new director of field product investigations and evaluations.

16 deaths?

GM said ignition failure may be related to three fatalities in Impalas. It has linked the Cobalt defect to 13 deaths and 54 crashes, with the first fatal crash occurring in late 2003.

In all cases, the ignition switch can slip out of the “run” position, cutting the engine, power steering and power brakes while also disabling the airbags in case of a crash.

A decade ago, the Detroit 3 gave their small cars little attention and few resources. Before cost cuts totaling about $9 billion in 2005 and 2006, the Cobalt and other small cars were money losers, GM's then-Vice Chairman Bob Lutz said in September 2006.  

Even after those cuts, a $14,000 Cobalt had a much smaller margin than a $19,000 Malibu, a $22,000 Grand Am or a $38,000 SRX. Today's subcompact Chevrolet Sonic, which GM says it can produce profitably only because the Michigan workers who make it earn second-tier wages, has roughly the same sticker price as the Ohio-built Cobalt did.

“All our small cars were unprofitable” when fixed costs averaged $8,000 per car in North America, Mr. Lutz told The Wall Street Journal. But, he said, the cuts significantly improved the Cobalt's bottom line: “We now make money on that car.”

This report appeared on the website of Automotive News, a Detroit-based sister publication of Tire Business.