© ReutersGeneral Motors' new CEO Mary Barra faces a two-day grilling in front of Congress over the recall scandal
Regulators and GM executives will come under fire Tuesday as Congress pushes for answers on why the auto company failed to recall over a million cars despite evidence it knew of fatal flaws in their design.
Over the weekend the House committee on energy and commerce released new details of its investigation into the events leading up to GM's recall of 2.6m vehicles for ignition-switch defects now linked to 13 deaths.
The latest revelations come as GM's newly installed chief executive officer Mary Barra prepares for a two-day grilling over the scandal in Washington. On Tuesday Barra and acting National Highway Traffic Safety Administration (NHTSA) administrator David Friedman will appear before the House committee. On Wednesday, they will talk to a Senate panel.
The House committee said regulators declined to open formal investigations into complaints about the cars on two occasions and that GM dropped plans for a fix in 2005 because it would have taken too long and cost too much money.
Government officials have been examining more than 200,000 pages of documents from GM and approximately 6,000 pages from the NHTSA. The committee found that in 2007 the federal regulator decided not to open an inquiry even after its own investigators had identified four fatal crashes, 29 complaints and 14 other reports related to ignition issues and problems with disabled air bags in Chevrolet Cobalts and other cars.
The agency again declined to open a full investigation after more issues with air bags surfaced in 2010.
According to the committee's timeline, GM knew of issues with the ignition switches in pre-production models of the Saturn Ion in 2001. In November 2004, GM engineers reported that ignition defects meant Chevrolet Cobalts could be "keyed off with knee while driving".
But in March 2005 a GM project engineering manager closed an investigation into the issue, saying the "lead time for all solutions is too long", "the tooling cost and piece price are too high" and none of the proposed fixes "represents an acceptable business case".
"The documents produced to the committee to date do not explain the criteria for an 'acceptable business case' and how the decision was made in this case," the committee said in its memo.
Instead of issuing a recall, GM issued a bulletin to dealers with the subject line: "Information on Inadvertent Turning Off of Key Cylinder, Loss of Electrical System and No DTCs [diagnostic trouble code]."
The bulletin informed dealers about the ignition issue and recommended potential remedies including removing heavy items from key rings.
Earlier this month the families of three teenagers killed or injured in a 2006 car crash involving a 2005 Cobalt sued GM for negligence and fraud for not disclosing facts about the defects. Natasha Weigel, 18, and Amy Rademaker, 15, died in the crash. Megan Phillips, the car's driver, suffered permanent brain damage.
The lawsuit is one of hundreds that GM could potentially face over fatalities linked to ignition and air bag issues. Barra said earlier this month that "terrible things" had happened at the company and said the recalls would cost GM $300m in the first quarter.
GM is not commenting ahead of the congressional hearings. Over the weekend the NHTSA said it had "reviewed data from a number of sources in 2007, but the data we had available at the time did not warrant a formal investigation." The agency said it is "aggressively investigating" the recall and new information provided by GM.
David Johnson, chairman of crisis management consultancy Strategic Vision, said this week's hearings were high stakes for GM and Barra. "This is very damaging in the short term for GM, they have been trying to demonstrate that they are a new company after the bailout. For Barra it is going to be about what she knew and when. When did she find out about these issues and what did she do?"
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