General Motors issued a stop-sale order to dealers for 2,800 Corvettes. A recall is likely to follow.
General Motors dealers have been told to halt sales of 2,800 of the maker’s new Chevrolet Corvette models because of a pair of potential problems.
The move is the latest in a series of so-called Stop-Sale notices issued by the Detroit maker as it has discovered potential defects with its various models during a year of close scrutiny. It is expected that GM will follow with an official recall notice for the Corvettes.
GM has so far this year issued 65 recall campaigns in the U.S. market covering 29.1 million vehicles. That includes 2.6 million older models equipped with faulty ignition switches linked to at least 13 deaths. The maker has been hauled before Congress repeatedly, while a potential criminal probe by the U.S. Justice Department moves ahead. And it has been slammed with the largest-ever fine by federal safety regulators for its decade-long delay in acting on the ignition switch problem.
The Corvette problem comes just days after GM CEO Mary Barra suggested that the worst of the company’s recall problems were over. And the Stop-Sale involves one of the carmaker’s most high-profile products, a vehicle that was named North American Car of the Year by a jury of 50 U.S. and Canadian journalists last January.
About 2,000 Chevrolet Corvettes from the new 2015 model-year may have a “suspect part” that is supposed to attach the driver’s side airbag to the steering wheel. Another 800 ‘Vettes could be equipped with rear parking brake cables that were not properly installed.
GM plans to inspect the vehicles to see if they need repairs. Spokesman Alan Adler indicated the vast majority of the 2,800 Corvette sports cars have not yet been sold or delivered to customers.
GM has issued two other Stop-Sale notices this year, both leading to subsequent recalls.
The maker has scrambled to deal with a crisis triggered by the February ignition switch recall, the first big test for CEO Barra, who took her post only late last year. The company veteran quickly appointed a new “safety czar” to oversee GM’s handling of vehicle issues. That led to a rapid rollout of new recalls, many dealing with older models that suffering problems that critics contend were long ignored.
The maker has so far written off $1.5 billion for the cost of handling its record run of recalls during just the first two quarters of the year. But its bill is expected to run significantly higher. The maker’s chief financial officer recently forecast the tab will reach at least $600 million for a victim’s compensation fund covering those killed or injured due to those faulty ignition switches. But the figure could run significantly higher, according to the fund’s administrator who has already received over 100 claims.
GM paid out $35 million in May as the result of a record fine levied by the National Highway Traffic Safety Administration. It faces at least 100 lawsuits, one that plaintiffs’ attorneys have suggested could seek as much as $10 billion in compensation for GM vehicle owners.
GM also is under investigation by the Securities and Exchange Commission, 45 state attorneys-general, Canadian safety regulators and both houses of Congress.
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Potentially the most serious probe is one launched by the U.S. Justice Department that could see criminal charges brought against GM and some of its current and former employees. The maker fired 15 staff members earlier this year following the conclusion of an internal study that found a pattern of “incompetence and neglect” in handling safety-related issues.
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GM is meanwhile racing to finish ignition switch repairs, an initial shortage of parts leading it to estimate that process would take until October to complete.
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Despite the maker’s safety woes, CEO Barra tried to put a positive spin on matters during a CNBC interview this week, insisting, “When you look at the safety we have on today’s vehicles and the ratings they’ve gotten from a variety of external sources, those vehicles speak for themselves.”
The new Corvette Stop-Sale could prove an embarrassing setback.