It is five years today since General Motors (GM), America’s largest car manufacturer, filed for bankruptcy at the height of the financial crisis. The company recovered, thanks to a $49.5bn (£29.5bn) bailout from the US taxpayer, and has gone on to reclaim its place as one of the most profitable firms in the world. Now, however, GM and its fellow auto giants face a different kind of disaster.
Last week, Ford – GM’s Detroit neighbour and closest rival – announced the recall of 1.4 million of its vehicles. Approximately 1.1 million Ford SUVs are thought to be at risk of a loss of power steering, while a further 200,000 Ford Taurus sedans are considered prone to corrosion issues. Yet Ford’s recall woes pale in comparison to their competitor’s.
Two weeks ago, GM recalled 2.4 million vehicles due to safety concerns, taking its recall tally for this year to a record 13.8 million vehicles in the US alone – more cars than the company sold globally in the whole of 2013. Worldwide, GM has recalled more than 15.8 million cars in 2014. And regulators are reportedly investigating potential flaws in some 2 million more GM vehicles that are still on the road.
The most recent GM recall covered possible faults in seat belts and transmissions. The cars in question have not been linked to any deaths, though the same cannot be said of previous recalls. It recently emerged that GM was aware for more than 10 years about a defect in some vehicles, which could cause their engines to cut out without warning.
The company has admitted that the issue is connected to 13 road deaths, though one report based on US federal crash data said as many as 303 may have died as a result of the faulty ignition switches. The company has disputed this, saying the report only looked at raw data and did not evaluate the reasons. “Without rigorous analysis, it is pure speculation,” the auto giant said in a statement.
GM is believed to have noticed the fault in 2001, during the launch of the since-discontinued Saturn Ion, when it found that under certain circumstances an ignition switch could abruptly shut off power to a moving car, affecting steering and brakes, and even disabling airbags. The company did not recall any of the affected vehicles until earlier this year.
In one case, in October 2006, two Wisconsin teenagers were killed after the GM Chevy Cobalt they were riding in struck a tree. The driver survived the crash, but 15-year-old Amy Rademaker, who was sitting in the front passenger seat, died because her airbag failed to deploy. Her friend Natasha Weigel, 18, was sitting in the back, and died from head injuries 11 days later. Yet GM has only recognised those cases in which airbags failed: Miss Rademaker is among the 13 victims counted in the firm’s official death toll; Ms Weigel, whose seat lacked an airbag, is not.
A PowerPoint presentation given to GM engineers in 2008, and recently released to the US National Highway Traffic Safety Administration, gave a lengthy list of words and phrases to be avoided when communicating internally about potential vehicle faults. GM feared leaks of embarrassing emails to the media or regulators, and banned phrases such as: “This is a lawsuit waiting to happen”; ,“death-trap”; “dangerous”; “life-threatening”; “Hindenburg”; “grenade-like”; and “rolling sarcophagus”.
For failing to address the potentially deadly safety defects for more than a decade, the government last month fined GM $35m, the maximum permitted under US law. Congress is considering an increase in the maximum penalty, to $300m. The recalls are thought to have cost GM about $1.7bn so far this year – although, since its 2009 bankruptcy, the company has made profits totalling $22.5bn.