GM’s image problem worsens
“We will be fully transparent,” General Motors (GM) CEO Mary Barra promised when she testified before Congress in early April. She might have added—just not yet.
GM’s recall woes have now worsened, with the government’s auto-safety regulator blasting the company for stonewalling in its response to 107 questions the government asked about the 2.6 million vehicles GM has recalled for faulty ignition switches. GM says the problem has been linked to at least 13 deaths. The biggest question is why GM waited so long to recall the vehicles, given that it knew of the problem at least a decade ago. Given GM’s incomplete answers, the government is fining the automaker $7,000 a day indefinitely, and the Justice Dept. could end up pressing criminal charges.
There’s a bit of predictable role-playing going on in the public standoff between GM and the government. The National Highway Traffic Safety Administration has come under criticism itself for doing nothing to force GM to recall the dangerous cars, even though it had some information indicating a problem. Many recalls involve some sort of behind-the-scenes negotiating between automakers and safety regulators.
The ignition problem is now different because it quickly snowballed into a major safety scandal involving deaths and injuries, and there’s also the powerful odor of a coverup somewhere along the way. So NHTSA is now flexing its muscles in an effort to show the public—plus its Congressional overseers—that it’s on the case.
Those muscles aren’t all that beefy. The $7,000-per-day fine—the biggest allowed under NHTSA’s rules—is so tiny that if it went on for 10 years, it would still amount to less than 1% of GM’s 2013 profit. Criminal charges, should the Justice Dept. pursue them, would be a much bigger problem. The bad publicity is also troubling for GM, since the image of a corporate bully that is [re] emerging could quickly undo the good will GM has struggled to build with taxpayers since its 2009 bankruptcy filing and government bailout.
Related: Mary Barra’s strong leadership will lead GM beyond recall drama
There’s reason to expect GM to become more cooperative, on account of two unusual steps it has taken. First, it hired an outside law firm to investigate what happened and produce a thorough report. As long as GM makes that report public and there’s no obvious whitewashing, that ought to answer a lot of the questions GM has been dodging. The thorniest issue may be fingering executives responsible for averting a recall around 2006 or 2007, which GM seems extremely reluctant to do.