What GM must do to avoid Toyota’s legal stumbles
Out with the old, in with the new.
Just as the government is wrapping up four years of litigation with Toyota, it’s embarking on a similar tussle with General Motors (GM). The Toyota litigation stems from a series of recalls that began in 2009, on account of sticky gas pedals and unsecured floor mats that led to unintended acceleration in several models, and at least five deaths. In addition to the costly recalls, the Justice Dept. mounted a criminal inquiry focused on Toyota withholding safety data from regulators. Toyota has now agreed to settle those charges for $1.2 billion, ending the criminal probe but not private lawsuits against the company.
General Motors is now where Toyota was in 2009. It has recalled 1.6 million vehicles from model years 2003 to 2007 because of faulty ignition switches that have been linked to 12 fatalities in 31 crashes, and an unknown number of injuries. GM knew of the problem as early as 2001, yet went 13 years before initiating a recall. GM CEO Mary Barra, on the job since January, said she only learned of the problem this year, and promptly ordered the recall. But that doesn’t absolve GM of criminal liability or other types of charges, which it may ultimately face.
Under Barra, GM has been more forthright about safety problems than Toyota was back in 2009. But GM could still end up embroiled in litigation for years — and it’s in a weaker position than Toyota was in 2009, making a proper handling of the crisis even more important for GM. Toyota was one of the auto industry’s strongest brands when controversy struck in 2009, which cushioned the impact of bad publicity. GM, by contrast, is still rebuilding its image after declaring bankruptcy in 2009 and accepting a deeply unpopular federal bailout.
Here are three things GM must do to avoid prolonged negative fallout from the recalls:
Explain what happened. It’s still unclear why GM didn’t order a recall or take some other kind of decisive action when it began to realize ignition switches in Chevrolet Cobalts, Pontiac G5s and several other models could inadvertently turn from “on” to “off” with the car running, cutting power to steering, braking and airbag systems. This is where criminal liability could lie if there’s evidence GM withheld important safety data from regulators or neglected to fix dangerous cars while knowing there was a problem. The Justice Dept. hasn’t decided to press charges yet but has begun an inquiry. Both houses of Congress and the National Highway Traffic Safety Administration have also begun investigations, making it likely troubling details about the problem will continue to emerge.