General Motors CEO Mary Barra testifies on the GM ignition switch recall during a US House Oversight and Investigations Subcommittee hearing on Capitol Hill in Washington, DC, yesterday. Barra was updating lawmakers on an internal GM report published on June 5 that absolved top management in the failure to recall millions of cars for more than a decade after the problems with the ignition switches were discovered.

 Reuters/Washington

US lawmakers yesterday reprimanded General Motors Co for a “culture of secrecy” and said a company investigation that found top executives did not know for years about a deadly ignition-switch defect does not absolve them of responsibility.

GM chief executive Mary Barra returned before a House Energy and Commerce subcommittee to face harsh questions about why the No 1 US automaker waited more than a decade to recall millions of vehicles with the defect linked to at least 13 deaths.

Barra, who became CEO only in January but is a GM veteran of more than 30 years, has said she did not become aware of the problem until December 2013.

Democratic Representative Diana DeGette of Colorado said it is “frankly alarming” that a GM report released earlier this month found that top executives were not made aware of the deadly flaw for years, even though there was widespread evidence among lower-level engineers and lawyers.

“This is nothing to be proud of,” she said. She also said GM’s “culture of secrecy” must be changed through more than structural management adjustments.

The company has pushed out 15 employees since the recalls were announced, including some high-ranking officials, but the departures have not affected the top level of executives.

Lawmakers also said they are concerned that the number of recalls connected to ignition-switch issues continues to grow.

GM has issued 44 recalls this year totalling about 20mn vehicles worldwide, which is more than total annual US vehicle sales. Of the recalls this year, nearly 6.5mn of the vehicles were recalled for ignition switch-related issues, including more than half a million Chevrolet Camaros on Friday.

In just the past week, GM has recalled more than 3mn vehicles that apparently suffer from a separate ignition defect than the 2.6mn vehicles already recalled for the deadly ignition flaw. GM is taking recall-related charges of $2bn so far this year.

“We are currently conducting what I believe is the most exhaustive, comprehensive safety review in the history of the company,” Barra said yesterday.

But lawmakers pounced on the mounting recalls as potential evidence of bigger safety problems at GM.

Republican Representative Tim Murphy of Pennsylvania, chairman of the oversight subcommittee holding the hearing, said the latest recalls are “hauntingly similar” to the prior recalls connected to more than 13 deaths.

GM has not tied any fatalities to the more recent recalls.

The ignition-switch problems can cause the cars to stall during operation. Because of the engine stalls, air bags failed to deploy during crashes — some of them fatal — and drivers had difficulty operating their vehicles because power steering and brake systems also malfunctioned.

Separately yesterday, US safety regulators said they have opened two investigations into Chrysler Group vehicles involving possibly faulty ignition switches that can be bumped out of the “run” position, disabling air bags in the event of a crash.

The issue is similar to the GM recalls. No deaths and one injury are linked to the ignition-switch issue suspected in about 1.25mn vehicles covering five Chrysler Group models involved in the new investigations by the National Highway Traffic Safety Administration, the agency said.

Chrysler Group is a unit of Fiat Chrysler Automobiles .

Barra said in her testimony yesterday that GM is addressing any and all safety concerns. She also said the company is committed to change.

“I want this terrible experience permanently etched in our collective memories. This is a tragic problem that never should have happened. And it must never happen again.”

Barra also said a compensation fund that GM is creating will cover all victims who suffered a serious physical injury, as well as families of victims who died.

Barra appeared with Anton Valukas, the GM-hired investigator who delivered the report earlier this month that spared top executives and pinned blame on lower-level engineers and lawyers.

The report said those employees either did not appreciate the danger of the flaw or did not share the risk with their superiors.

GM and Barra have so far weathered the scandal with few signs of permanent damage. The automaker’s May US sales were up 12.6% from the prior year, well above analyst expectations, and its share price is slightly stronger than just before the announcement of the first ignition-related recall on February 13.

 

New $10bn lawsuit saying recalls damaged brand

 

A new lawsuit says General Motors Co should compensate millions of car and truck owners for lost resale value, potentially exceeding $10bn, because a slew of recalls and a deadly delay in recalling cars with defective ignition switches has damaged its brand.

According to a complaint filed yesterday with the federal court in Riverside, California, GM hurt customers by concealing known defects and valuing cost-cutting over safety, leading to roughly 40 recalls covering more than 20mn vehicles this year alone.

It said this has caused a variety of late-model vehicles to lose roughly $500 to $2,600 in resale value.

Hagens Berman Sobol Shapiro, which filed the lawsuit, said the case could be worth more than $10bn, and is the first seeking to force GM to pay a potential 15mn car and truck owners, not just those whose vehicles were recalled, for damage to its brand and reputation.

A GM spokesman, Greg Martin, declined to comment on the lawsuit. He said that many customers and analysts recognised the strength of the GM brand and that the market recognition has resulted in increased sales, transaction prices and residual values. The lawsuit painted a “disturbing picture” of GM’s approach to safety, including how “in truly Orwellian fashion” the largest US automaker would encourage employees to avoid words such as “bad” and “failed,” and use euphemisms such as “issue” or “condition” rather than “problem” when discussing defects.

“GM’s egregious and widely publicised conduct and the never-ending and piecemeal nature of GM’s recalls has so tarnished the affected vehicles that no reasonable consumer would have paid the price they did when the GM brand meant safety and success,” the complaint said.

The plaintiff is Anna Andrews, a resident of La Quinta, California. She said she would not have bought her used 2010 Buick LaCrosse, or would have paid less for it, had GM done a better job of disclosing vehicle defects.

Her lawsuit seeks class-action status for people who owned or leased GM vehicles sold between July 10, 2009, and April 1, 2014, or who later sold such vehicles at cut-rate prices.

Vehicles affected by the earlier ignition-switch recalls are not included in the lawsuit. Thirteen deaths have been linked to those vehicles.