During the pinnacle of its ignition switch fiasco in May 2014, General Motors consented to a governmental decree that involved paying a record $35 million civil penalty for delaying a recall of 2.6 million older vehicles for defective ignition switches, which is now linked to at least 104 deaths and more than 175 injuries (as of May 2015). As if that, along with the negative public perception and stemming recall expenses weren’t enough, GM also agreed to disclose all possible safety problems to NHTSA and meet with the agency on a monthly basis for one year. Now, a year later, National Highway Traffic Safety Administration chief, Mark Rosekind, praised the GM-NHTSA consent agreement as a creative response, which has been used by the agency in other enforcement actions.
At the end of April, Rosekind met with GM CEO Mary Barra and other senior managers in Detroit for over two hours. During the meeting, GM delivered a detailed presentation about how it has improved its safety procedures and personnel.
“There’s a lot of change,” Rosekind said after the meeting. “I was very pleased to see how forthcoming they were about all of the safety changes that they have made. When we asked questions or made suggestions, they were very forthcoming.”
That’s a significant departure from NHTSA’s review of GM’s safety processes in May 2014. The appraisal cited a 2008 presentation that encouraged employees to be factual in their safety communications, but “not fantastic” in writing about problems, including not using words such as “safety related”, “defect,” or “dangerous”.
Despite Improvements, NHTSA Elects To Extend GM Oversight
Even with the notable improvements in GM’s vehicle safety processes that some have described as a complete about-face, the NHTSA this week decided to extend the mandatory monthly meetings with GM, which continue to require that the automaker disclose to the safety agency any safety issues, actual or potential, as per the consent decree signed in 2014. Under the consent order, the administration can require disclosures for another year for a total of three.
On Tuesday, GM spokesman Jim Cain told the Detroit News that the automaker has been very cooperative with the administration.
“We have fully complied with the terms of the consent order. More importantly, we have used our monthly meetings with NHTSA to foster a relationship that’s candid, transparent and totally focused on the safety of our customers. We’ve come a long way and we fully intend to build on this progress.”
GM Ignition Switch Recall, Summarized
In 2014, GM recalled 30 million vehicles worldwide across 84 recall campaigns, setting a record for the quantity of vehicles recalled. The most prominent of the recalls was the ignition switch campaign, which applied to vehicles no longer in production.
In these vehicles, when the vehicle’s key was inserted into the ignition, it could unintentionally flip to the “off” position while in motion, causing it to lose engine and electric power, thereby disabling features such as power steering and airbags. The former increases the risk of an accident while the latter ceases to protect passengers during an accident by not deploying airbags. The situation was more likely to occurr when the ignition key was on the same key ring as various other keys, thereby weighing down the ignition cylinder.
Following the recall crisis and various congressional hearings, General Motors faces several ongoing investigations, including those by the Justice Department, 50 state attorneys general, the Securities and Exchange Commission, and by Transport Canada.
Reorganizing Safety Organization
After a highly-critical report about GM’s internal safety processes in 2014, CEO Mary Barry fired 15 employees and disciplined five. The automaker has also dozens of new safety engineers and GM CEO Mary Barra reorganized the company’s safety organization led by a global safety chief, a newly-created position.
Establishing Compensation Fund
To pay for the deaths and injuries related to the ignition switch recall, the automaker has created a compensation fund that is being administered by Ken Feinberg.
The fund has an objective to complete its review of all outstanding compensation claims by the end of July 2015. Through March 31, 2015, it has paid $208 million and expects to spend a total of $550 million on compensation claims.
Recalls Fall Sharply In 2015
Will NHTSA Continue Oversight In 2016?
But the question on our minds is whether or not NHTSA, come May 2016, will opt to continue its GM oversight for a third year, or whether two will be enough.