Lessons For Suppliers From GM’s Belated Ignition Switch Recall

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GM’s well-crafted, post-bankruptcy image as a more efficient, product savvy, financially prudent, customer-focused automaker is suffering severe damage. The cause of the damage is that GM did not recall until this year over a million older vehicles that GM now reports had defects affecting motor vehicle safety. According to chronologies in the defect reports GM submitted to NHTSA, GM approved an ignition switch for production that did not meet GM’s specifications. It then launched new vehicles with those out-of-spec switches. After the vehicles were on the road, it attributed post-launch customer complaints and potential safety concerns about the switch to customers inadvertently bumping and turning off the switch. It issued a service bulletin that it thought addressed that issue. Then notwithstanding the corrective service bulletin, it revised the switch design to make it comply with its specifications. Then after the redesign, it failed to give the good part a revised part number. These actions have resulted in a large product recall, nine years after the fact, then the doubling of the recall population to include vehicles that may have had their switches replaced during service because GM could not tell whether they were replaced with good or bad switches because of the common part number. Worst yet, during the delay GM received “claims” that the switches were “linked to” injuries and deaths.

Members of Congress, safety advocates resurrected from the sixties and seventies and the news media have since accused the entire company of being narrowly and entirely focused on cost and profit at the expense of motor vehicle safety. Senator Claire McCaskill was even harsher accusing the company as having a “culture of cover-up.” Whether there is any merit to these accusations or characterizations they demonstrate the immediate and intensely negative impact a publicized safety issue like this can have on a manufacturer’s image and business.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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