The Unvarnished Truth About the GM Recall

Suspicion grows that the bankruptcy at America’s flagship car maker General Motors in recent years was not only financial; it was moral.

For 10 years, the company was aware of a potentially lethal technical flaw in several of its vehicles and yet failed to take action.

GM executives and engineers knew as early as 2005 about faulty ignition switches that were since linked to at least 13 fatal accidents. But it was not until Feb. 13 of this year that the company began a recall that now stands at 1.6 million vehicles. GM had reviewed the problem, but for reasons as yet undisclosed, decided to continue production and marketing as usual.

The degree of suspicion that the decision-making process at GM was seriously flawed — possibly even a deliberate coverup — is reflected by the manner in which the federal government has demanded an unraveling of the mystery.

The National Highway Traffic Safety Administration found an initial report on the problem from GM to be shoddy and unacceptable. The agency then submitted a list of no less than 107 questions to GM in an effort to plug gaps in the chronology of events. The probe has been described as unprecedented; veteran safety experts say they’ve never seen anything like it.

In a more forgiving mood, regulators and the public might be inclined to attribute the automaker’s failure to order a recall at a much earlier date to the overall state of inefficiency that plagued GM up to its bankruptcy in 2009. It wouldn’t be fair to blame the new company for an “old culture,” would it?

But the “new” GM’s performance during this crisis shows that some things haven’t changed. The company’s response to requests for an explanation has been dismaying. Suddenly, the much-touted efficiency of the post-bankruptcy era disappeared, and GM could not seem to get the motor running in providing full disclosure.

General Motors’ communication with the public on this issue has been notably closed-mouthed. Aside from a few written statements, it doesn’t want to discuss it.

As vigorous as government regulators may be now in seeking answers from GM, they themselves may be coming under scrutiny in the coming days.

A former head of the National Highway Traffic Safety Administration, Joan Claybrook, has raised the issue of why NHTSA itself, which knew of the ignition key problem as early as 2007, did not require a recall back then. Claybrook, now a safety activist, says that NHTSA itself “failed to carry out the law” and should itself be brought under investigation.

A standard defense in such matters — that hindsight always makes statistically ambiguous data far more obvious than they were originally — does not seem applicable. For in the GM case, NHTSA was well aware of the potential danger. It ordered three Special Crash Investigations, studies performed by outside investigators. The agency sought to determine why then-new “smart” airbags were failing to deploy in some GM crashes, a failure which led to the current recall.

GM’s new CEO Mary Barra has promised an “unvarnished” internal investigation to find out what exactly happened and prevent it from happening again.

There is a lot at stake. Not so much the fine of up to $35 million if NHTSA concludes that GM deliberately delayed its response or withheld evidence. While it would be the biggest such fine in NHTSA history, it’s not something that will have a company the size of GM — which made $3.8 billion last year — running scared.

The real fear for General Motors is potential damage to the brand. As GM spokesman Alan Adler said, “We want our customers to know that today’s GM is committed to fixing this problem in a manner that earns their trust.”

GM executives are no doubt mindful of the experience of Toyota, which paid a significant price for its recalls. The Japanese manufacturer had 17 percent of the U.S. market in 2009, but its share tumbled to 13.4 percent in early 2010 in the midst of a maelstrom of recalls. The company has been gradually rebuilding consumer confidence; its previous record of high quality and reliability helped.

The public — especially the families and friends of those who died in the crashes when the airbag or other systems failed — will be watching the investigation closely. They will want to know if those deaths could have been avoided by a timely recall. And if so, was General Motors guilty of a series of honest mistakes, or was it a systematic evasion of moral responsibility?

Nothing will bring back the loved ones that were lost. At best, the good name of General Motors will be saved. But whether it is or not, the public deserves to know what happened. The whole, unvarnished story.