Home Stocks GM Ordered 500,000 Ignition Switches Prior To The Recall

GM Ordered 500,000 Ignition Switches Prior To The Recall

When you purchase through our sponsored links, we may earn a commission. By using this website you agree to our T&Cs.

General Motors Company (NYSE:GM) ordered 500,000 replacement ignition switches two months prior to informing the government that its small cars should be recalled based on e-mails released in a court on Monday.

Lawyer raised question on GM’s truthfulness

Texas personal injury attorney Robert Hillard released the e-mails and questioned the automakers’ extent of knowledge regarding the defective ignition switches that caused fatalities.

Atty. Hillard also raised questions regarding the truthfulness of General Motors Company (NYSE:GM) about the recall in its congressional testimony as well as in the internal investigation conducted by former Attorney General Anton Valukas.

General Motors Company (NYSE:GM) knew about the defective ignition switches as of December 18, 2013 based on the exchange if e-mails between the lower-level employees of the automaker and Delphi Corp. The automakers’ employees knew that certain models of Chevrolet Cobalt should be recalled because the ignition switch was the cause of the non-deployment of air bags.  The e-mails showed that the situation was described the situation as “urgent” and eventually “safety issue.”

“This pulls the curtain back completely and proves GM has not been forthright,” according to Atty. Hillard.  He argued that CEO Mary Barra, who was then head of product development and purchasing at General Motors Company (NYSE:GM) should have known about the orders for 500,000 new ignition switches with an unbudgeted amount of $3 million.

“This completely reframes the conversation, the investigation and a re-examination of the truth of Ms. Barra’s involvement,” said Atty. Hillard.

The lawyer argued that General Motors Company (NYSE:GM) should have reported the problem to the government and warned customers immediately. According to him, an immediate warning could have prevented one death and 85 injuries for his clients alone.

General Motors Company (NYSE:GM) decided to recall its vehicles not until January 2014 and informed the government about the situation on February 7. Barra did not mention about the orders for new ignition switches during her testimony before the Congress. It was not also included in the Valukas report.

Standard procedure

General Motors Company (NYSE:GM) explained that it is a standard procedure to order components before making a recall decision.

Barra previously stated the she learned about the defective ignition switches on the latter part of December last year and the recall in January 31. GM’s spokesperson Alan Adler said the automaker stands behind the original statement of its CEO.

General Motors Company (NYSE:GM) ordered the new ignition switches one day after a committee composed of three executives met to consider a recall. However, the executives did not make a recall decision because they did not have adequate information at the time.

The Valukas report indicated that John Calabrese, then GM’s vice president of engineering said the investigators of the automakers did not know what was preventing the air bags from deployment. His statement delayed GM’s decision to recall its vehicles.

Atty. Hillard pointed out that General Motors Company (NYSE:GM) would not order as much as 500,000 new ignition switches if it was not aware of the problem. He is demanding additional documents to find out if the higher-level executives knew about the orders.

“This email chain creates more questions than it answers. It will be interesting to learn from the GM documents how high up it went, how far back it went,” said Atty. Hillard.

In a statement, GM said, “We have reorganized our entire safety investigation and decision process and have more investigators, move issues more quickly and make decisions with better data.”

Our Editorial Standards

At ValueWalk, we’re committed to providing accurate, research-backed information. Our editors go above and beyond to ensure our content is trustworthy and transparent.

Marie Cabural

Want Financial Guidance Sent Straight to You?

  • Pop your email in the box, and you'll receive bi-weekly emails from ValueWalk.
  • We never send spam — only the latest financial news and guides to help you take charge of your financial future.