GM CEO Barra Doesn’t Know Why Ignition Switch Recalls Took So Long

Updated on

General Motors Company (NYSE:GM) CEO Mary Barra will testify in front of the House Committee on Energy and Commerce Subcommittee on Oversight and Investigations today and tomorrow to answer one question: why did it take so long for dangerous ignition switches to be recalled? According to the written testimony that she made available yesterday, she frankly doesn’t know.

“More than a decade ago, GM embarked on a small car program. Sitting here today, I cannot tell you why it took years for a safety defect to be announced in that program, but I can tell you that we will find out,” she wrote. “Today’s GM will do the right thing.”

Barra became CEO in January, so whatever was behind the decision not to recall the ignition switches earlier didn’t take place on her watch, but as a lifelong General Motors Company (NYSE:GM) employee (she started in 1980 at the age of 18) and a part of upper level management for several years, she can’t claim to be an outsider coming in to fix the mess either.

Barra: Former US attorney brought in to investigate

Barra has brought in former US attorney Anton Valukas to investigate the lapse that has been connected to multiple deaths, and appointed a new VP of Global Vehicle Safety (Jeff Boyer) to resolve any other safety issues that may still exist. If one major design flaw was allowed to persist, there’s no reason to assume there aren’t other issues still out there endangering drivers. Boyer is specifically tasked with making sure that isn’t the case (or fixing it, as the case may be).

GM working with dealers to retain customers

General Motors Company’s (NYSE:GM) stock price is down 14% since the beginning of the year, its stock price could continue to take a beating as the recall investigation unfolds, and the company is in danger of permanently losing customers affected by the recall. Barra is trying to mitigate the harm done by 1.6 million recalls at the start of her tenure by offering drivers a free rental car while waiting for new parts and repairs. Customers who would rather just get a new car (some of the recalled cars are several years old) are being given better deals on leases and purchases. Barra said that GM is working with dealers to make sure they have the leeway to work with customer complaints on an individual basis to keep everyone happy.

“Getting the cars repaired is only the first step. Giving customers the best support possible throughout this process is how we will be judged,” writes Barra.

Leave a Comment