What's Going on with GM? Recalls, Congress and the Company's Future

It’s been a bad few days for General Motors (GM). News of recalls, and then extended recalls, and then – surprise, surprise – even more recalls has shaken trust in the company’s cars and, maybe worse, shaken trust in the company itself. It’s also made it pretty tricky for consumers to keep clear in their heads exactly which vehicles are being recalled, which ones may contain lesser-reported problems, and how exactly the whole drama will end.

In the company’s grand calculations, profits were put before people’s lives.

There’s also a bigger question at the heart of all this: how could the company keep such a major problem hidden for so long?

GM’s new CEO, Mary Barra, is working hard to forge a distinction between the “old” GM under which these defects were hidden, and a “new,” forward-looking company practically bursting with eagerness to be honest and forthright. Does she mean it? It’s far too early to say – Barra is in full damage-control mode, appearing before a Congressional hearing twice this week (including this afternoon) to explain and defend GM’s actions. Documents submitted to the subcommittee in charge of the hearing suggest, as you might expect, that cost was the major factor in most of GM’s previous decisions. A decade ago, the decision was made not to implement fixes to ignition switch defects in certain cars. Lives were lost as a result of that decision, and Time.com reported today that GM probably saved, in the end, a whopping $1 per car overall.

Barra described the company’s initial decision not to recall the faulty cars as “disturbing” and unacceptable. The future, she said, would be different – and GM is ready to atone for its mistakes.

Disturbing is the right word for GM’s decision– in the company’s grand calculations, profits were put before people’s lives. Thirteen deaths have been linked to the faulty ignition switches – and even more injuries and crashes. Are the mass recalls happening now simply a case of GM covering their backs by being overly cautious? It’s tempting to think so. In a specially-launched “dedicated customer website about our recent ignition switch recall,” Barra writes that “[GM] is completely focused on doing what is best for you, our customers, and ensuring that our response is handled as swiftly and completely as possible.”

Of course, it probably doesn’t hurt that what’s best for the company at this point goes hand-in-hand with what’s best for the customers.

State vehicle registration details are being used to notify all those affected, and the company is sending out instructions on what to do next. The number of recalled vehicles now totals more than 2.6 million nationwide.

If there’s any silver lining to this debacle, it’s that GM and other car makers now know exactly where they stand and exactly what their priorities must be. “Today, if there is a safety issue, we take action,” Barra told Congress. “If we know there is a defect, we do not look at the cost associated with it, we look at the speed at which we can fix the issue.”

Warm words, indeed.

Time.com has put together a great tool for tracking and searching car recalls as far back as 2004. GM certainly leads the pack, with 756 individual recalls over the last ten years; however, practically every manufacturer appears on the list. Recalls are issued for a variety of reasons, of course, and many are relatively minor, but a world in which car manufacturers will always err on the side of caution is a better world to live in.

As for GM, the company faces personal injury lawsuits from those injured in crashes linked to the ignition switch defect, as well as class action lawsuits on behalf of all consumers affected by the recalls. This morning, Law360 reported that at least fifteen consumer fraud class action suits have been filed across the United States, accusing GM of deceiving customers and violating warranties. The suits reportedly allege violations of more than 40 states’ consumer protection laws. Vehicles that have now been recalled have been sold since 2003, so while the number of personal injury and wrongful death lawsuits already on file may never be known, the recent spotlight on the issues is sure to prompt a new wave of litigation.

So, what’s going on with GM? A lot – but most of all, change. Whether it’s out of necessity or a genuine desire remains up for debate, but Barra has one thing right: the old GM is gone, and a new GM is here to take its place.