The part costs less than $10 wholesale. The fix takes less than an hour. A mechanic removes a few screws and connectors, takes off a plastic shroud, pops in the new switch, and the customer is back on the road.
It’s relatively cheap and easy to replace the flawed ignition switch that has been blamed for at least 13 deaths, including a fatal June 2013 crash in Quebec newly linked to the defect. Yet General Motors waited more than a decade before recalling 2.6 million Chevrolet Cobalts and other small cars.
GM’s failure to alert customers sooner could end up costing the automaker hundreds of millions of dollars in fines and much more in reputational damage. It has already cost the lives of the drivers, who perished at least in part because the faulty switches suddenly shut off their cars, stiffening brakes and power steering and disabling air bags.
With so much at stake, why didn’t GM act sooner?
The answer, according to many people familiar with the automaker, is a corporate culture reluctant to pass along bad news. When GM was struggling to cut costs and buff its image, a recall of its popular small cars would have been a terrible setback. By the time GM engineers began to face up to the potential gravity of the defect, the Great Recession had hit and the company was begging Congress for a taxpayer bailout that would become its financial lifeline.
“It’s pretty clear that somebody somewhere was being penny-wise and pound-foolish,” said Marina Whitman, a professor at the University of Michigan and a former economist at GM. “It’s hard to find an explanation for why somebody didn’t do something about something that was known for a good decade. And, for that matter, why (federal regulators) didn’t wake up sooner.”
Whatever the explanation, the price of inaction for GM — which was surging after its 2009 bankruptcy and the federal bailout — is sure to be significant. The company is being sued by trial lawyers in several states, and the National Highway Traffic Safety Administration is investigating. Meanwhile, both the House and the Senate have scheduled hearings for this week.
In preparation for those sessions, due to begin Tuesday, congressional investigators have been poring over 235,000 pages of documents supplied by NHTSA regulators and GM. They say they are troubled by what they have learned.
In 2007, a NHTSA official recommended opening a formal investigation of complaints and other evidence of Cobalt and Saturn Ion air bags not deploying, according to a memo released Sunday by Republican investigators in the House. But the idea was rejected two months later by a panel of NHTSA officials who did not detect a trend in the evidence they reviewed. Meanwhile, there were more crashes, more lawsuits and more settlements, the details shrouded in secrecy. Some victims’ families say they may seek to reopen those settlements now that they know GM delayed taking corrective measures.
“Although we have had the documents for less than a week, they paint an unsettling picture,” said a joint statement issued Sunday by House Energy and Commerce Committee Chairman Fred Upton, R-Mich., and the chairman of the investigations subcommittee, Tim Murphy, R-Pa., who are spearheading the House inquiry.
“Lives are at stake, and we will follow the facts where they lead us as we work to pinpoint where the system failed.”
GM also is facing a federal criminal probe. Some analysts say prosecutors could seek penalties similar to the $1.2 billion fine the Justice Department recently levied on Toyota for allegedly lying to the public about an unintended-acceleration problem that led to the recall of many models.
“These investigations always reveal the person who ignored the obvious, the person who dismissed potential problems,” said Maryann Keller, an independent consultant who wrote a book about GM. “What it doesn’t reveal is whether or not there was a systemic problem within the company and whether people consciously or unconsciously avoided giving superiors bad news.”