Product Recall

ETM627 Carter Seward - GM ignition switch recall Dec. 1, 2014 1

What: General Motors ignition switches in Chevrolet, Saturn, and Pontiac vehicles

Recall Date: February 24, 2014 [3]; March 11, 2014 [4]; March 28, 2014[5]

Why: The ignition switch may turn from the “run” position to the “accessory” position if the vehicle experiences jarring motions or if there is too much weight on the key chain. Ignition switches in the “accessory” position correspond to a loss or reduction of power, and if this occurs during the sensing algorithm for crashes, the airbags may not deploy resulting in an increased potential for occupant injury or death.

Incidents: General Motors has received 1,580 claims for death and injury. General Motors has deemed that 61 of the claims are eligible for compensation, including 31 injuries and 30 deaths [2].  

Number of Units Sold: 5.4 Million [1].

When Sold: 2005-2010

Management Issues

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Recognition of Problem: The vehicles that were affected by the recall have been manufactured since January 2005. More than 5.4 million vehicles from multiple manufacturers have been recalled since 2005. Saturn, Chevrolet, Cadillac, and Pontiac are all subsidiaries of General Motors and all manufactured vehicles with the faulty ignition switches. General Motors has received 1,580 claims for death and injury [2]. General Motors adds ignition lock cylinders to all affected recalled vehicles free of charge to the customer.

Speed of Response: The response has been slow throughout the organization. Engineers first reported problems during development phases of Saturn Vehicles in 2001.Government agencies were unable to correlate the ignition switch malfunctions with crash data and failed to launch a formal investigation. General Motors began formally investigating the issue in 2011 [8]

Responsibility: During testimony at a senate hearing, GM’s CEO Marry Barra remarked that GM failed to handle the issue in a responsible way. Barra apologized publicly and personally on behalf of General Motors Barra acknowledged GM’s shortcomings, “We are going to fix our mistakes and we are going to be a better, stronger company” [9].

ETM627 Carter Seward - GM ignition switch recall Dec. 1, 2014

Impact of Recall

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Legal Consequences: There have been over 100 personal injury, wrongful death, and economic loss lawsuits filed since the ignition switch issue was uncovered. These lawsuits were a direct result from both GM and federal investigations of the affected vehicles. It is expected that a small group of the cases will serve as pretrial proceedings, also known as “bellwether” cases. These cases are not binding in other cases, instead they will only help the parties determine how juries will react to certain evidence and testimony [6]. The first GM recall trial date is set for January 11, 2016, which gives both parties one year to prepare their cases before presenting them to a jury.

Reputation: The incident seems little effect on the reputation of GM vehicles and its subsidiaries. The company’s stock (GM) for the most part has been stable through the third quarter of 2014, only showing signs of decrease in the fourth quarter. It likely helps that many of GM’s competitors have also had major recalls; Honda and Toyota have also had large recalls in 2013-2014. Details of the recall are still emerging and the trials have not yet been conducted, so it is possible that the full effects of the recalls are yet to be seen.

Sales: GM has continued to see steady sales over the 2014 fiscal year. Despite the recalls, GM has experienced its best third quarter sales since 1980, and total sales throughout the first nine months of the fiscal year are up 2% over last years numbers [7]. GM has also said that sales are up 8% in the United States and 9.5% in North America. As previously mentioned, this may be due in part to similar recalls from competing auto manufacturers.

ETM627 Carter Seward - GM ignition switch recall Dec. 1, 2014

References

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[1] Basu, Tonya. (2014, March 31). Timeline: A History Of GM's Ignition Switch Defect. National Public Radio. Retrieved from: http://www.npr.org/2014/03/31/297158876/timeline-a-history-of-gms-ignition-switch-defect

[2] Edwards, Julia. (2014, Oct 27). Deaths linked to GM's faulty ignition switch rise to 30. Reuters. Retrieved from: http://www.reuters.com/article/2014/10/27/us-gm-recall-fund-idUSKBN0IG1M820141027

[3] General Motors LLC. (2014, February 24). GM Recall 13454. Retrieved from: http://www-odi.nhtsa.dot.gov/acms/cs/jaxrs/download/doc/UCM450663/RCDNN-14V047-3409.pdf

[4] General Motors LLC. (2014, March 11). GM Recall 14063 . Retrieved from: http://www-odi.nhtsa.dot.gov/acms/cs/jaxrs/download/doc/UCM451430/RCDNN-14V047-9346P.pdf

ETM627 Carter Seward - GM ignition switch recall Dec. 1, 2014

References

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[5] General Motors LLC. (2014, March 28). GM Recall 14092. Retrieved from: http://www-odi.nhtsa.dot.gov/acms/cs/jaxrs/download/doc/UCM452913/RCDNN-14V047-8089.pdf

[6] Kirk, Austin. (2014, Nov. 11). GM Ignition Switch Trial Date Set for Jan 2016, as Lawsuits Continue to Mount. Retrieved from: http://www.aboutlawsuits.com/gm-ignition-recall-bellwether-set-73765/

[7] (2014, Oct. 15). Reuters. GM's third-quarter global vehicle sales up 2 percent on strong China, U.S. demand. Retrieved from: http://www.reuters.com/article/2014/10/15/us-gm-sales-idUSKCN0I41PI20141015

[8] Valdes-Dapena, P. , Yellin, Y. (2014). GM: Steps to a recall nightmare. Retrieved from: http://money.cnn.com/infographic/pf/autos/gm-

recall-timeline/

[9] Vlasic, B., Kessler, M. (2014, July 17). At Hearing on G.M. Recall, Mary Barra Gives Little Ground. New York Times. Retrieved from: http://www.nytimes.com/2014/07/18/business/senate-hearing-on-general-motors.html

ETM627 Carter Seward - GM ignition switch recall Dec. 1, 2014