Tag Archive | "General Motors"

GM Judges Hear Claims of 60 Deaths as Defect Suit Merger Mulled

A panel of federal judges heard arguments on where to merge 90 ignition defect suits against General Motors Co., with New York and California courts as the lead contenders, as lawyers for car owners claimed to know of many more related deaths than the 13 acknowledged by the automaker, reported The Detroit News.

Corpus Christi, Texas lawyer Rudy Gonzales claimed to know of at least 60 deaths related to the defect, without providing the seven-member panel any evidence. The defect causes ignition switches in some cars to shut off while the vehicles are being driven, disabling power steering and preventing airbags from deploying upon impact.

The judges will decide where claims for economic losses associated with some of the 2.59 million recalled cars will initially be heard.

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Ex-GM CEO Akerson: Barra ‘Unaware’ of Ignition Switch Problem

Via The Detroit News:

Former General Motors Co. CEO Dan Akerson says he believes his successor Mary Barra was unaware of the ignition switch problems that led to the eventual recall of 2.6 million vehicles linked to 13 deaths and 47 crashes.

In an interview with Forbes, Akerson — breaking his silence on the issue — said the board didn’t throw Barra under the bus by giving her the job and knowing of a looming crisis.

“Mary has said it: The moment she became aware of the problem, as I would expect, she confronted it. She didn’t know about it. I bet my life on it,” Akerson told the magazine in a story that was posted Wednesday morning.

GM has turned over hundreds of thousands of pages of records to Congress, and no emails or other records have emerged to suggest Barra knew about the issue in her prior jobs in product development and in other positions.

GM’s board met in Washington in December to pick a successor after Akerson told the board he needed to leave ahead of schedule because his wife had been diagnosed with cancer. Barra took over as CEO on Jan. 15, about a month before the first ignition switch recall.

Former senior executives at GM have previously told The Detroit News that top management was unaware of the issue. The Justice Department, Securities and Exchange Commission, a group of attorneys general and two congressional committees are investigating.

GM plans to issue its internal report from a former U.S. attorney in Chicago as early as next week into what went wrong, planning to provide a detailed chronology of the events that led to GM’s eventual recall of 2.6 million vehicles. GM also is expected soon to have a report from compensation expert Kenneth Feinberg. GM hired Feinberg to help the automaker look at options and determine if it will compensate victims related to the ignition switch defect — and if so, how much it will pay them.

This month, GM paid a record-setting $35 million fine and agreed to up to three years of enhanced oversight by the National Highway Traffic Safety Administration over its delayed recall.

GM Chairman Tim Solso also told the magazine that the board has confidence in Barra.

“The confidence has grown over a period of time, given the way that Mary has handled all the situations: testifying before Congress, meeting with the media,” Solso said. “She’s done a superb job, and the board recognizes that.”

Barra, in a rare interview since the GM recall crisis hit, also tells Forbes about listening to the stories of families who lost loved ones in crashes they believe are tied to the faulty ignition switches and she thinks the crisis will help the automaker change its ways.

“I really feel — obviously we want to do the right thing and serve the customer well through this — but it’s also an opportunity to accelerate cultural change,” she said.

More changes are expected once GM releases its internal report. The automaker already has made numerous changes to its safety engineering operations, as a few top engineering executives have retired from the company and Barra placed two engineers on paid leave. GM has restructured its vehicle engineering department and has moved several employees into new jobs in its safety engineering division.

Former Obama administration auto adviser Harry Wilson said last week the crisis “sadly is emblematic of the cultural problems.”

“They would do anything to save a penny, including some really bad decisions, both economically and morally. That was a part of the culture that was driven by a company that was living on the brink of disaster for many years prior to 2009,” Wilson said.

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‘Upset’ G.M. Engineer Spoke in House Inquiry

Via The New York Times:

An engineer at General Motors who is at the center of accusations that the company covered up a deadly defect appeared distraught during lengthy questioning by congressional investigators, according to people familiar with the session.

The engineer, Raymond DeGiorgio, who was suspended last month with pay, has not spoken publicly since G.M. acknowledged the ignition switch defect in February and began recalling millions of Chevrolet Cobalts, Saturn Ions and other models. The automaker has linked the defect to 13 deaths, a number that federal regulators said was expected to grow.

A House staff aide said that Mr. DeGiorgio, 61, appeared “genuinely upset” about the deaths and about his inability to connect the ignition switch problem with the failure of air bags to deploy.

The defective switch could cause engines to shut down, disabling electrical systems and things like power steering, power brakes and air bags. Mr. DeGiorgio, who has worked at G.M. since 1991, was a lead design engineer for ignition switches for a variety of models.

“He came across as if he was just overburdened and just missed it,” said the staff member, who was not authorized to speak publicly about the investigation. Mr. DeGiorgio’s comments, during 10 hours of questioning on May 19, offer a glimpse into how the switch was secretly changed eight years ago, but no recall was issued for vehicles equipped with the defective switches until this February.

Mr. DeGiorgio did not give any information that indicated that the new chief executive of G.M., Mary T. Barra, knew anything about the problem before she took her job early this year. He did not seek to implicate any of his superiors, the people familiar with the questioning said.

Mr. DeGiorgio was asked about statements he made during a deposition last year in a wrongful-death lawsuit brought against G.M. Mr. DeGiorgio told the congressional investigators that when giving that deposition, he had forgotten his decision to order a major upgrade in the switch, according to the people familiar with the session.

Mr. DeGiorgio signed off on changes in the ignition switch in April 2006, authorizing a supplier, Delphi, to make improvements to the switch at its manufacturing plant in Mexico. But he denied it in the deposition last year in the lawsuit, which was brought by the family of a Georgia woman who died in a 2005 Chevrolet Cobalt.

“I don’t ever recall authorizing such a change,” he said in a sworn deposition in April 2013.

Under questioning by the House investigators, Mr. DeGiorgio said he had forgotten about the fix — which involved a stronger spring in the mechanism that determines how much force is needed to turn the key — because it was one of a package of changes, and because it was seven years before the deposition, according to the people familiar with the questioning.

Mr. DeGiorgio was not sworn in, but speaking untruthfully in such settings can carry substantial legal penalties, according to experts.

The change he approved covered two items, the spring and a printed circuit board, known as a P.C.B., that was causing some Saturn Ion models not to start, according to one person involved in the case.

“He definitely said he was more focused on electrical problems” said the staff member, who described Mr. DeGiorgio as “very emotional at times.”

Mr. DeGiorgio’s actions might not have come to light without an independent investigation by a Florida engineer, Mark Hood, who was retained by the family of the Georgia woman, Brooke Melton.

Mr. Hood discovered that switches in Cobalts made after 2006 were significantly stronger than ones found in pre-2006 cars.

He was pressed on that point by Lance Cooper, the lawyer for the Melton family during the deposition last year.

“So if any such change is made, it was made without your knowledge and authorization?” Mr. Cooper asked.

“That is correct,” Mr. DeGiorgio said.

The Meltons have asked that their case against G.M. be reopened on the grounds that Mr. DeGiorgio possibly committed perjury, because it appeared that he gave a false answer in the deposition last year.

Ms. Barra, the chief executive, acknowledged under questioning by lawmakers on April 2 that Mr. DeGiorgio might have lied during his deposition.

“You know he lied under oath,” said Senator Claire McCaskill, Democrat of Missouri.

“The data that’s been put in front of me indicates that, but I’m waiting for the full investigation,” Ms. Barra said.

Eight days later, on April 10, Mr. DeGiorgio was suspended with pay by G.M. along with his supervisor, Gary Altman. House investigators have also interviewed Mr. Altman. Mr. DeGiorgio has not returned telephone calls to his home in a rural suburb of Detroit.

Interviews by House investigators are often a preliminary step to calling witnesses for a public hearing, although the House committee undertaking the investigation, Energy and Commerce, has not scheduled a hearing.

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Suzuki Recalls GM-Made Small Cars for Fire Problem

Via Michigan Live:

DETROIT, MI — Suzuki is recalling more than 184,000 small cars in the U.S. because the steering columns can catch fire.

The recall covers Forenza models from 2004 through 2008 and Reno models from 2005 through 2008. Both vehicles were made for Suzuki by General Motors.

The Japanese automaker says the headlamp switch or daytime running light modules can overheat, melt and catch fire on the left side of the steering column.

The company will notify owners and fix the problem for free. It hasn’t scheduled the repairs yet.

GM on Wednesday recalled 218,000 Chevrolet Aveo subcompact cars for a similar problem as the company continues to review safety issues and issue recalls.

It was GM’s 29th recall this year, bringing its total number of recalled in the U.S. to around 13.8 million.

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GM Sales Appear Resilient Amid Recalls, Dealers Optimistic

Via Reuters:

In the midst of an historic run of recalls, including over one defect linked to at least 13 deaths, General Motors Co sales are showing resilience.

The No. 1 U.S. automaker is beating the industry average this month, according to one estimate, and more than 10 dealers interviewed by Reuters were upbeat, saying lingering concerns about the safety of the company’s current new car lineup are dissipating even as the number of recalls rise.

While dealers report some wariness from owners of GM cars, they say GM’s mounting recalls – the 15.8 million vehicles globally recalled in 2014 is more than last year’s total U.S. new car sales by all manufacturers — are not stoking fears.

Nearly two months ago, after her Texas dealership had missed its own March sales target, Ancira Motor Company Vice President April Ancira told Reuters that it would take time for GM to gain back lost customers and that Chevrolet was “suffering”. This week, she said that dealership traffic had rebounded from a dip and customer worries have waned. Once-frequent concerned customer calls have declined to a call or two a week.

“There are still a few customers concerned about safety, but GM has really stepped up to the plate,” she said, citing free rental cars for customers waiting for repairs to Chevrolet Cobalts and other models with defective ignition switches, the highest profile recall linked to 13 deaths. GM’s U.S. recalls, 29 this year, show its concern with safety, she said.

Investors have been less relaxed. GM stock is down almost 20 percent this year and the company has announced $1.7 billion in recall-related charges in the first two quarters.

In its latest announcements this week, GM recalled 2.6 million vehicles due to possible faulty seat belts, transmissions, air bags and fire issues, and another 284,000 to address a potential fire hazard.

In previous surveys by Reuters, dealers reported a barrage of customer calls with questions about the safety of their cars, especially the 2.6 million vehicles, including Saturn Ions and Cobalts, recalled for the ignition switch defect linked to the deaths.

But all four of GM’s U.S. brands reported April sales increases, and according to LMC Automotive research, GM’s retail sales through May 18 were up 3.5 percent compared with the same period a year ago, higher than the industry average of 0.5 percent.

Buckingham Research Group this week recommended buying GM stock aggressively, saying in a note to clients that thus far “there has been no measurable impact in the marketplace, and we believe that will continue.”

A weekly analysis of customer “consideration” for GM brands by industry researcher Edmunds.com shows no significant impact of the recall so far.

George Hoffer, a University of Richmond transportation economist, said that as the ignition switch recall involves some older vehicles and defunct brands, its impact has been muted. He added that constant media coverage of recalls has “inoculated” consumers against them.

Toyota’s recall of more than 9 million vehicles in 2009 and 2010, partly related to unintended acceleration, led to a dip in sales and resale prices for the brand, said Larry Dominique, executive vice president at industry researcher TrueCar.com. But it dissipated when negative headlines about the recalls faded, he argued.

Toyota’s share of the U.S. market has still not returned to its 2009 peak, although the company has had to deal with issues beyond its own cars, including improved quality from its competitors and the aftermath of the 2011 Japanese tsunami.

During GM’s April 24 quarterly earnings call Chief Executive Mary Barra was asked by an analyst whether increased traffic in dealerships related to the recalls could lead to new sales.

Apart from stressing concern over the ignition switch issue, Barra said GM was focusing on customer service through the recall process and offering employee pricing to car owners.

“We see that as a huge opportunity,” she said of the increased traffic to dealerships.

Matt Jones, a senior editor at Edmunds.com who focuses on dealerships, said that the opportunity for new car sales during the recall process is not that high.

“When people come in for a recall they’re not in the buying stage, they’re in the fix-it stage,” he said.

But several dealers said they had sold a small number of cars to recall customers and appeared to take the attitude that any customer on the lot was a sales opportunity.

“The key is to make this as pleasant and smooth an experience as possible so that when these car owners are ready to buy, they’ll think of us,” said Andy Sweis, general manager at Jennings Chevrolet in Glenview, Illinois, who said his dealership had seen “a few” sales to recall customers.

Al Cerrone of Cerrone Chevrolet Buick & GMC Truck dealership in South Attleboro, Massachusetts said some customers are trading in recalled cars for new Buicks.

Now a consultant at the dealership he recently sold, Cerrone said customers are aware of the recalls but don’t disparage GM.

“The silver lining is pent-up demand,” he said. “They’ve held out for a long time because of the economy or whatever, but now it’s time for them to buy.”

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GM Legal Department Under Scrutiny in Company’s Recall Probe

Via Reuters:

General Motors’ legal department is the focus of an internal inquiry into how the company handled a vehicle safety defect linked to 13 deaths, the New York Times reported, citing two people with knowledge of the inquiry.

The U.S. government hit the automaker with a $35 million fine on Friday for its delayed response to an ignition switch defect in millions of vehicles. Regulators accused company officials of concealing the problem.

The largest U.S. automaker originally noticed the defect more than a decade ago but issued the first recalls only in February of this year despite years of consumer complaints.

In an article published on Saturday, the Times said a review of internal documents, emails and interviews showed that high-ranking officials “particularly in GM’s legal department, led by the general counsel Michael P. Millikin, acted with increasing urgency in the last 12 months to grapple with the spreading impact of the ignition problem.”

The newspaper said a number of GM departments stepped up efforts to fix the switches when depositions threatened to ensnare senior officials, and company lawyers moved to keep its actions secret from families of crash victims and others.

GM faces other federal investigations into its handling of the recall, which could produce more severe punishments. The $35 million fine was the maximum the U.S. Transportation Department could impose.

U.S. Transportation Secretary Anthony Foxx said GM had broken the law and failed to meet its obligations to public safety.

GM’s internal investigation is expected to be completed within the next two weeks. The U.S. Congress, Department of Justice, Securities and Exchange Commission and several states are also conducting investigations.

The Times said GM had declined to make Millikin or other executives available for interviews for its story. It said four senior executives have resigned or left the company since the recall began, including Jim Federico, a top engineer who avoided being deposed in a lawsuit last year when GM settled a case tied to a defective ignition switch.

The newspaper said GM lawyers unexpectedly approved the settlement last September in a lawsuit filed by the family of a Georgia woman who died in a Cobalt crash in 2010.

Documents indicate GM restarted its internal investigation because of information uncovered in the Georgia case, the Times said.

The faulty ignition switches on Chevrolet Cobalts, Saturn Ions and other GM vehicles can cause their engines to stall, which in turn prevents air bags from deploying during crashes. As well, power steering and power brakes do not operate when the ignition switch unexpectedly moves from the “on” position to “accessory.”

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