General Motors has just announced that it needs to recall 3.4 million cars to replace their keys, which might move out of alignment if they are carrying too much weight (i.e., heavy keychains) or if the car is jarred, say, but hitting a pothole or a railroad track. This could cause the car to shut off its engine and disable power steering.
The models being recalled now include:
- Buick Lacrosse, 2005-2009
- Chevrolet Impala, 2006-2014
- Cadillac Deville, 2000-2005
- Cadillac DTS, 2004-2011
- Buick Lucerne, 2006-2011
- Buick Regal, LS & GS, 2004-2005
- Chevy Monte Carlo, 2006-2008
Keep in mind, this is from the same company that went bankrupt in 2009 and flew its top brass to Washington in a private jet to ask for a bailout. Ultimately, the federal government shelled out some $50 billion to save GM and another $12.5 billion to save Chrysler, thus saving 1.5 million jobs in the process. But recent reports that the U.S. ultimately lost $11.1 billion on its investment in GM.
Put another way, General Motors has some 219,000 employees worldwide. The $11.1 billion bath the U.S. taxpayer took to save the company means that it cost some $50,700 to save each GM employee, who collectively went on to create one of the worst product liability disasters in modern history.
But how bad is the situation, really? Read on to see exactly how big of a SNAFU General Motors has gotten itself into this time…
General Motors is already recalling 2.6 million older small cars in the U.S., mostly, for a similar ignition switch problem where the problem is with the switch itself, and can cause the car to stall. This recall is linked to 13 deaths, and numerous reports indicate that GM knew of the fault for years before issuing the recall. But those 13 deaths are just what GM is acknowledging. The real number of people who died from the defect could be more than 300.
Fun fact: the average liability cost per U.S. fatality in the airline industry averages around $4 million per person, sometimes ranging as high as $10 million. And that's without a decade-long history of neglect involved. At $10 million per fatality, GM could be looking at a $3 billion liability event. That's more than the worldwide gross for Avatar, the most successful movie of all time.
In comparison, the Ford Pinto fuel tank recall scandal, which redefined the modern scope and legal liability of product recalls in general, involved the death of just 27 people.
General Motors CEO Mary Barra speaks during a news conference in Detroit last week. (AP Photo/Paul Sancya)
GM is also recalling 166,000 other cars for various other reasons. You know things are bad when a recall of 166,000 vehicles is the least of your problems. To get to the heart of the matter, the Detroit automaker released a report written by former U.S. attorney Anton R. Valukas that damned a "history of incompetence" at the company, which let some 11 years lapse without addressing lethal safety issues. Some 15 employees have been let go as a result.
CEO Mary Barra has only served at the company's top post for five months, but she has spent some 30 years with the company, so the scathing indictment of GM's "nod culture"—in which people would nod in agreement that a problem existed and then do nothing to actually address the problem—should have come as no surprise.
You can read the full text of the Valukas report here.
The numbers on this thing are just staggering.
GM has recalled 17.73 million cars in the U.S. alone this year. According to the most recent World Vehicles in Operation report from Ward's Auto, in 2010, there were 17.56 million cars operating in the entire continent of Africa.
Heck, there are only 13.3 million cars in all of India.
17.73 million cars is more cars than are on the road in Austria, Denmark, Finland, Ireland, Norway and Switzerland combined.
It's more than…well, you get the idea. A lot.
GM's recalls this year total more than 20 million cars worldwide. How many cars is that? Again, going to Ward's Auto data for 2010, that would be the rough equivalent to GM invading Mexico and removing every single car from the road. South of border seem a little daunting? GM could just as well invade Canada and do the same thing; either nation has about the same number of cars on the road.
(AP Photo/Lefteris Pitarakis)
Sorry, we just can't let this go. GM's recall of more than 20 million cars worldwide means it has, on its own, recalled just about as many cars as were recalled in the entirety of the United States in 2013. And it's more than all cars recalled in the U.S. in 2012.
(AP Photo/David Zalubowski, File)
GM's recall costs in this quarter alone have risen from $400 million to $700 million. How much extra expense is that? Let's put it this way: if GM had not had any of these recalls, they could have instead commissioned a fleet of seven Airbus 320NEO airliners, remote-piloted them all over the desert somewhere and crashed them into each other, and be in no worse financial condition.
To put an ever finer point on it, GM incurred about $700 million in separate recall charges last quarter. If they keep this up, Airbus is going to run out of planes.
We can't single out GM too badly, though. Rival carmaker Toyota is certainly making a run of it in most recalls ever. Earlier this year, Toyota recalled 6 million cars, its biggest recall ever, to fix a range of safety issues. And this came on the heels of Toyota paying a $1.2 billion fine to end a criminal probe into an unintended acceleration defect issue that led to the recall of some 10 million cars.
The sad truth is that we can probably expect to see more GM- and Toyota-level recalls going forward, not less. This is, incredibly enough, the new normal.
(AP Photo/Shizuo Kambayashi)
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