GM’s Recall Rabbit Hole Just Keeps Getting Deeper


General Motors (NYSE:GM) has been taking heat recently for not addressing an ignition issue in numerous vehicles that was apparently discovered in 2004, though a Wall Street Journal report from Thursday reveals that GM actually knew about the problem even earlier than thought — it found out about it thirteen years ago, in 2001. Further, General Motors still isn’t sure what the exact parameters of the issue are, and are still working for determine the scope of the problem.

In short, the recall — which initially covered 778,000 units when it launched in January and was expanded to 1.6 million in February — could see greater expansion as General Motors discovers further product lines that have been affected by the problem. For those who haven’t been keeping up to speed, certain GM vehicles can see the ignition cylinder disengage when too much weight is placed on the keyring, causing the cars to shut down unexpectedly. Some thirteen people have died as a result, out of thirty-one accidents.

Delphi Automotive, which makes the troubled component, added some fuel to the fire when it said the part costs only a couple of dollars and takes literally minutes to install. This, in turn, raises some questions about why the part was not swapped out when the issue was discovered. GM is now the subject of three separate investigations, including a criminal probe, the Journal reports.

General Motors has spent the last few months performing its own internal investigation to establish what exactly happened in the years since the issue made itself apparent. The digging unearthed a report from 2001 that detailed a problem with the ignition switch for a Saturn Ion (one of the recalled products, though only later models) “assembled before the start of regular production of vehicles for sale,” the Journal says. GM said another document from 2003 stated that a service technician observed an Ion stall while driving.

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In this instance, the technician noted that the owner of the vehicle “had several keys on the key ring” and the additional weight of the keys had “worn out the ignition switch,” according to General Motors’ chronological survey. The switch was replaced and the case was closed with no further ramifications.

In 2004, the problem was discovered in GM’s own testing prior to the Chevrolet Cobalt’s public launch. GM techs replicated the issue during testing, and an engineering inquiry was opened into the matter, but it was later closed after determining it would take too long and cost too much to fix, the company said in its report.

Determined to try and make the situation as right with buyers as possible, new CEO Mary Barra — who had this debacle dropped in her lap days after coming into her spot at the helm — said that GM will be offering $500 toward the cost of a new GM vehicle for current owners of recalled units, for purchase or for lease. The offer is valid through April 30 and can be used toward a new 2013, 2014, or 2015 model year Chevrolet, Buick, GMC or Cadillac, according to the Wall Street Journal.

“In keeping with our commitment to help customers involved in this recall, a special, $500 cash allowance is available to purchase or lease a new GM vehicle,” spokesman Greg Martin said to the Journal. “We have been very clear in our message to dealers that this allowance is not a sales tool and it is only to be used to help customers in need of assistance. Neither GM, nor its dealers will market or solicit owners using this allowance.”

At the scope that the recall stands at now, this implies that General Motors would be offering up incentives worth about $800 million in total, assuming the recall isn’t expanded further. GM is also offering free loaner vehicles.

The company has until April 3 to answer 107 questions that were demanded of it by the National Highway Traffic Safety Administration. The agency is determining if GM was negligent in the time it took to respond to the recall.

Further, owners won’t be able to get their vehicles fixed until next month, when GM will start replacing the ignition cylinders. The problem so far affects the 2005-2007 Chevrolet Cobalt and Pontiac G5, the 2003-2007 Saturn Ion, the 2006-2007 Chevrolet HHR, the 2006-2007 Pontiac Solstice, and the 2007 Saturn Sky.

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