GM product chief Mark Reuss will reportedly lead new management oversight of safety issues.
Even as General Motors struggles to catch up with the recall repairs it has already ordered, the maker is apparently getting ready to announce still more safety-related callbacks in the weeks and months ahead, cautions a new analyst’s report.
During a meeting with senior GM officials this week, analysts from Barclays were advised that the fast pace of safety-related actions could continue through at least mid-summer. And along with more near-term recalls, GM is taking steps at a senior management level that could lead to longer-term changes in its safety operations.
“It is tough to say if recalls from past vehicles has already peaked, as the team has not yet completed mining the data,” it has been gathering, lead Barclays analyst Brian Johnson wrote following the meeting in Detroit. “Also, given the data-mining is being conducted on an issue by issue, and not on a make and model-year basis, it is possible that GM may issue further recalls for vehicles which have already been recalled.”
GM’s recall crisis began in mid-February, when it announced the first in what became an expanding recall of vehicles equipped with defective ignition switches. Ultimately, 2.6 million vehicles were impacted by that problem – which has been linked to 13 deaths. But that only set things in motion. With four recalls announced earlier this week, following five the week before, GM has now staged 29 separate safety-related callbacks since the beginning of the year affecting about 13.5 million vehicles sold in the U.S. alone, more than during any year in its history.
The intense scrutiny has impacted the entire auto industry, Fiat Chrysler Automobiles CEO Sergio Marchionne noted earlier this week, as he announced plans to bring in an outside consultants to see if FCA has any additional problems that need be addressed.
Toyota, which was already taking more aggressive action in the wake of its own 2009-2010 safety scandal, this week announced three recalls of its own covering more than 430,000 vehicles sold in the U.S. For the year, Toyota is second only to GM in terms of the number of vehicles that have been recalled.
(For more on Toyota’s three new recalls, Click Here.)
But all told, the industry now has announced service actions involving more than 20 million vehicles, with many industry observers anticipating a new record could be set by mid-year, and all but certainly before 2014 is over. The previous record, 30.5 million vehicles recalled, was set in 2004, according to the National Highway Traffic Safety Administration.
But nowhere is the situation more apparent than GM which has recalled about 20 times more vehicles than it had at this point in 2013. The maker is clearly motivated to move more quickly. It agreed to pay a record $35 million fine to NHTSA this month and could face additional penalties. Many expect GM could be hit with a penalty as large as – or even larger than – the $1.2 billion Toyota recently paid to settle an investigation by the U.S. Justice Department. GM also revealed this week that 79 lawsuits have been filed claiming monetary losses in terms of used car values for vehicles covered by the ignition switch recall.
(Click Here for details about GM’s latest recalls.)
On the positive side, a study by ALG, the former Automotive Leasing Guide, finds used car values for those vehicles has actually dropped very little so far. And, at least through April, GM sales have shown little impact from the recall crisis, Barclay’s Johnson noted, though observers will be watching closely once May numbers are released.
(Chrysler CEO Marchionne orders review of the maker’s handling of recalls. Click Here for the story.)
Shortly after the maker’s crisis began, CEO Mary Barra said she would take direct control of GM’s response. And it appears that top management, long isolated from day-to-day safety issues, will remain more involved going forward.
A new safety czar, reporting directly to Barra, has been appointed – and given 30 more product investigators to search for potential problems. The team has expanded its data mining efforts, wrote Johnson, and hopes to complete the review by mid-summer, which could lead to further large recalls.
Meanwhile, the analyst was told that global product development chief Mark Reuss will “lead a team of five who will make decisions on recalls going forward.”
Even though GM is moving to make changes in its safety oversight, the maker is struggling to deal with all the recalls it has so far announced. Dealers around the country are stressed to schedule time for all the owners demanding repairs. So far, only 47,000 of the 2.6 million vehicles affected by the ignition switch problem have been fixed, according to spokesman Terry Rhadigan.
The primary issue there, however, is a lack of replacement parts, supplier Delphi racing to ramp up production, but not likely to be able to provide enough new ignition switch modules to get the entire recall completed before October, GM is estimating.
It seems to me that it would be better all around if the automaker would correct a problem as it is found rather than trying to hide it until after several million defective units must be recalled due to death, and general bad press. Does anyone remember the Pinto and the $11 dollar fix that would have averted the fireball rear end collisions that resulted in deaths and very bad press. Would not the automakers benefit from making the car right from the beginning rather that having to remake if later at a higher overall cost, which includes bad press. In almost every venture it is less costly to build it right rather than having to rebuild later. The cost of a recall is so much more than the dollars involved.
Thank you for the opportunity to express my humble thoughts, though will probably not be read, and if read, will probably be dismissed as the drivel of a dreamer would rather have the pride of no recalls over the pocketing of a couple extra pennies.
Hi, John,
Thanks for your comments. Your points are very well taken. There is no question that 1) Getting quality right before the vehicle leaves the plant is preferable; 2) That the cost of a recall invariably is higher than any factory fix. A couple issues to note: First, even luxury makers like Mercedes, Aston, even Rolls-Royce, have had their recalls over the last several years. And that brings up a couple relates matters. To begin with, automakers today rely heavily on suppliers for all but the most “core” components, and even an engine produced in-house still uses turbochargers, fuel injectors, brackets and hoses supplied from outside. That requires a maker to both work with its suppliers to enforce rigorous quality standards, and for the suppliers to enforce rules internally. Compounding the challenge, the concept of economies of scale now rules in this industry. That means you will see those turbos, brackets and hoses — as well as airbags, power window switches and the like — shared not just among the various models produced by manufacturer A, but often shared with manufacturers B through G. That’s why you can have millions of cars recalls when — as happened in recent years, a Japanese-made airbag module proves defective, or a master power window switch assembly proves sensitive to shorting out if it’s contacted by liquid.
I recently spent a few days in Mexico with Audi looking at their new assembly plant — and talking about their efforts to ensure maximum quality from suppliers. It is efforts like this critically needed to further reduce quality and safety-related problems.
That said, considering the increasingly complex nature of the automobile, the odds worsen that any particular model won’t face a recall at some point.
Paul A. Eisenstein
Publisher, TheDetroitBureau.com