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GM Now Says Ignition-Switch Troubles Date Back to 2001

March 13 (Bloomberg) -- General Motors Co. got its first internal report on ignition-switch problems in small cars in 2001, while developing the Saturn Ion, the automaker said in a letter to U.S. regulators.

GM thought it had fixed the ignition-switch defect, the carmaker said in a supplemental report filed with the National Highway Traffic Safety Administration yesterday. Then in 2003, service technicians found that an owner with a heavy key ring was experiencing engine stalls while driving. The flaw, linked to 12 deaths, led to the recall last month of 1.6 million cars.

The company filed the new information with NHTSA on what it did to address the problem to better explain why it expanded the recall to six U.S. models from two, roughly doubling the number of cars covered, Greg Martin, a spokesman for Detroit-based GM, said in an e-mail. The details concern the company’s attempts to investigate ignition-switch issues in the Ion, the Saturn Sky, the Chevrolet HHR and the Pontiac Solstice.

“Today’s GM is fully committed to learning from the past while embracing the highest standards for quality and performance now and in the future,” Martin said.

GM later used the same part in the Chevrolet Cobalt and Pontiac G5.

The 2001 testing failure disclosed by GM is earlier than when the carmaker said it learned of flaws in the Cobalt. Previously, the company said it had investigated in 2004 a consumer complaint and engineers were able to induce an engine stall. GM officials have said the problem was investigated at that time and no action was taken.

Frontal Crashes

“We don’t yet really know at what point this matter was escalated to past upper-level members of management, and how they dealt with it,” said Alec Gutierrez, a senior analyst at Kelley Blue Book in Irvine, California. “It’s also murky as to when current management learned about some of this.”

The flaw caused ignition switches to slip out of position and cut off engine power and deactivate air bags.

Meanwhile, NHTSA, the U.S. Transportation Department’s auto safety regulator, continued to come under criticism by lawmakers in Washington.

Senator Patty Murray, chairman of the Transportation Appropriations Subcommittee, asked whether auto manufacturers take seriously existing laws that require early reporting, as well as the Transportation Department’s administration of them.

“It raises a lot of questions why it took almost a decade for the automaker to report a serious defect,” the Washington state Democrat said at a hearing with Transportation Secretary Anthony Foxx today.

Getting Tough

Foxx reiterated comments acting NHTSA Administrator David Friedman said yesterday, that more information from GM earlier in the process would have “changed the outcome.” Three crash investigations in cars that would later have been covered by the recall were inconclusive, he said.

“We will be very, very tough when we find timeliness has been a problem,” Foxx said.

The agency is still in the early stages of fact-finding in an inquiry into whether GM acted quickly enough once it was clear there was a safety-related defect.

The largest U.S. automaker said it knows of eight frontal-impact crashes and four deaths involving Ions that may be linked to the defect. It knows of three frontal crashes involving the HHR that may be related, which caused three injuries but no fatalities, it said.

Consumer Perceptions

The recalled cars are the 2003-07 Saturn Ion, 2005-07 Chevrolet Cobalt, 2006-07 Chevy HHR, 2006-07 Pontiac Solstice, 2007 Saturn Sky, 2007 Pontiac G5 -- all U.S. models -- plus the 2005-06 Pontiac Pursuit marketed in Canada and the 2007 Open GT in Europe.

GM fell 2.2 percent to $34.09 today in New York. On March 11, the shares tumbled 5.1 percent, their worst one-day drop since March 2012, cutting the company’s market value by more than $3 billion.

“The difference between 10 or 12 years, if I’m a consumer, doesn’t make me feel any better or any worse, necessarily, about what happened,” Kelley Blue Book’s Gutierrez said of the evolving timeline. “What’s important for consumers at this point is what GM is doing to make it right.”

To contact the reporters on this story: Jeff Plungis in Washington at jplungis@bloomberg.net; Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net

To contact the editors responsible for this story: Jamie Butters at jbutters@bloomberg.net; Bernard Kohn at bkohn2@bloomberg.net Romaine Bostick

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