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GM CEO Mary Barra told Congress today that she “cannot tell you why it took years for a safety defect to be announced”.
Heidi Moore thinks the reason lies in the company’s sclerotic and hubristic corporate culture. The company never really changed after its 2009 bankruptcy, Moore says, and “all of that talk – of the reborn American automaker, of bets paid and dollars won – seems like a hollow spectacle”. James Pethokoukis agrees: “There is not much a $50 billion government check can do about a dysfunctional corporate culture except temporarily paper over it”.
GM’s internal safety and quality control procedures certainly look inadequate. The company knew about the ignition switch problem in 2001 and decided not to fix it in 2005 because it would have cost too much. GM was also aware of numerous other other problems with the Cobalt, the NYT reports based on state data. Before the ignition issues became public, “it was already seen as a lemon”: owners reported problems as farcical as windows falling out.
Federal regulators don’t look much more competent. The regulator charged with ensuring that America’s 248 million cars are defect-free has just 51 employees and a paltry $10 million budget. The result, the head of the National Consumer League tellsBloomberg, is ineffective oversight by the National Highway Traffic Safety Administration Office of Defects Investigation:
They’re getting information, and they’re not following up. They’re not capturing the information in a way that’s useful. They’re not responding quickly to a litany of similar complaints.
When the NHTSA does have the time and manpower to look into complaints, it seems to have in the case of GM to have missed a worrying trend in warranty data. NHTSA looked into the issue behind the recall and declined in both 2007 and 2010 to open formal investigations.
GM faces a series of investigations by federal authorities, but its financial liability may be limited. A provision in the company’s 2009 bankruptcy means the so-called new GM isn’t liable for the actions of the old GM. – Ben Walsh
On to today’s links: