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General Motors CEO Apologizes For Delay In Vehicle Recalls

Mary Barra, the Chief Executive of General Motors (GM), found herself in the line of fire in yesterday’s hearing, which was held to inquire about the delay in recalling GM cars that had faulty ignition switches. US lawmakers and families of those affected were unimpressed by the apology and demanded more accountability


By: Martin Blanc

Published: Apr 2, 2014 at 8:39 am Est

In a formal hearing held by the House subcommittee yesterday, General Motors Company (GM) CEO Mary Barra was expected to lift the curtain on why it took over a decade to recall 2.6 million GM vehicles running with faulty ignition switches. 13 casualties and dozens of injuries were linked back to the faulty ignitions, and thousands of complaints were registered with the National Highway Traffic Safety (NHTSA). The CEO had little to offer besides apologies and condolences to lawmakers as well as the family and friends of those affected.

Barra, who was promoted in January to the post of CEO, said: “I cannot tell you why it took years for a safety defect to be announced in that program, but I can tell you that we will find out.” She further added: “I am deeply sorry.”

Barra also mentioned hiring Anton Valukas, a former US attorney, to further look into Detroit-based automaker’s activities in relation to the installation of the faulty ignition switches. Moreover, Barra said that she will wait for the investigation to be fully completed before she makes any specific statement regarding the case.

Various pieces of evidence were presented during the hearing, and almost all these documents pointed out to the fact that General Motors was aware of the ignition switch problem even before the first Cobalt with the fault was sold over 10 years ago. A document shared by Colorado Congresswoman Diana DeGette stated that the company chose to prioritize cost savings over the safety of human lives. The document pointed out that the cost to replace the switch in 2005 was just $0.57.

David Friedman, acting administrator for the NHTSA, was also questioned during the same hearing. He acknowledged that the regulatory body received regular complaints against General Motors since 2002, the same year that the automaker decided to install substandard ignition switches in vehicles. GM went ahead with the installations despite Delphi Automotive PLC (DLPH), the company supplying the switches, informing the automaker that the switches did not meet GM’s quality standards. Friedman stated that the evidence was not substantial enough to spark an official NHTSA investigation.

Barra privately met with 22 family members of the victims of the accidents caused by the ignition switches. The meetings, conducted at GM offices in Washington on Monday, were done on the request of Robert Hilliard, the lawyer representing the victims’ families. He has also filed a class-action lawsuit against the company. Barra reportedly wept along with the family members while she gave her condolences.

Despite the company’s legal immunity against safety lawsuits, it is under heavy pressure from lawmakers to establish a fund to compensate the victims’ families. Mary Barra hinted at this by mentioning the hiring of attorney Kenneth Feinberg in Tuesday’s hearing. Feinberg has been supervising victim compensation funds in the US for almost every major disaster in the country in the recent past. However, there has not been an official announcement of the fund setup. Barra’s meeting on Monday failed to impress those who have been affected by the problematic switch in GM vehicles, and was condemned by many legal experts as a superficial “public relations” move.

GM’s Auto Sales Report

General Motors also witnessed a delay yesterday in reporting its official US auto sales data for March. The company cited a computer systems issue as the reason behind the seven-hour delay.

General Motors sold 256,047 vehicles in the month of March, which marks a 4% increase when compared to the same period last year. In contrast, the Street had expected the company to see a gain of 0.8% in its sales.

Sales for the Chevrolet Silverado and GMC Sierra rose 14% and 23%, respectively, on a year-over-year (YoY) basis, while Chevrolet car sales were up 10% during the same time. Cadillac SRX unit sales increased 37% over the year-earlier period.

GM’s average transaction prices set a new record of close to $34,000 per unit, up $2,000 when compared to the values recorded in the previous month, and about $3,800 higher YoY.

Like all other major automakers, GM’s sales volume also rose as the weather eased up across most states in the US. The seasonally adjusted annual auto sales rate was 16.4 million unit sales, higher than analysts’ expectations of 15.8 million.

General Motors stock fell in the second half of trading yesterday, closing down 0.23% overall. Shares are currently up 0.26% in pre-market trading.

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