Is GM Using Recalls to Drive Showroom Traffic?

GM recallIs General Motors trying to make lemonade out of lemons? In the case of the company’s recent string of lemon recalls, there seems to be a strategy to increase showroom traffic by issuing recalls for only those vehicles which do not require high costs to repair. GM CEO, Mary Barra, gave a hint at this strategy during last quarter’s earnings conference call.

Following is an excerpt from a transcript of GM’s April conference call Q & A session:

Adam Jonas – Morgan Stanley

Thanks. Good morning, everybody. First question is a two-part question. First, on the recall, 7 million units (recalled) obviously creates an enormous amount of showroom traffic and an opportunity to convert that traffic into new sales. So could you outline, perhaps, how successful have you been so far in getting folks coming in and holding the hand and obviously helping them with a real issue, but also

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Subaru Recall Weakens GM Defense that Brake Line Rust is Maintenance Issue

Subaru last week announced a second recall for vehicles which are prone to brake line corrosion in “salt belt” states. This latest recall follows a 2013 recall for the same issue, which can cause brake failure from burst brake lines due to rust. As Subaru does the right thing by consumers and motorists regarding the safety concern, General Motors continues to claim that brake line rust is a normal maintenance issue and refuses to recall its vehicles with the same problem.

The Subaru recall weakens GM’s defense that rusting brake lines do not need to be addressed by manufacturers and owners should bear the costs and responsibility to replace rusted brake lines. As with GM’s models, the Subaru models affected are prone to rust after six or seven winters. In the case of GM models, the company has far more complaints of brake line rust than any other manufacturer, as Read More ➡

Media Notices GM Refusal on Brake Line Recall Request

rusted brake lineOn May 13, we asked GM to recall Chevy Silverados and other pickups and SUVs with a brake line corrosion problem. GM responded by claiming that it was a “maintenance issue” and therefore not a reason to order a recall.

The media is finally paying attention to the issue. Yesterday, Bloomberg ran a story titled “GM’s Rusting Brake Lines Don’t Make the Cut in Record Recalls,” by Jeff Plungis and Jeff Green. From the piece:

“They seem to be doing a lot of recalls, but on closer investigation, you find they’re more hesitant to do the recalls that cost more money,” said Mark Modica, an associate fellow with the National Legal and Policy Center, who was a onetime GM bondholder and a former manager at a Saturn dealership in Pennsylvania. “GM’s response has been quite callous.”

The New York Times also covered the issue yesterday in an article titled “G.M. Read More ➡

NHTSA Lists 1,895 Complaints for GM Brake Lines, GM Denies Problem

bake line rustGeneral Motors continues to deny that there is a problem with rusting brake lines on its vehicles, as noted here yesterday. GM’s new Vice President of Global Safety, Jeffrey Boyer, claims that brake line rust “is a maintenance issue that affects the entire automotive industry.” However, a search of the National Highway Traffic Safety Administration’s (NHTSA) website shows that GM vehicles have about ten times the complaints for brake lines than Ford, Toyota and Honda combined!

NHTSA has a tool to allow searches for complaints by keyword. While there is an ongoing NHTSA investigation on model year 1999 to 2003 GM trucks, the investigation has never been expanded to include newer models which also seem to be plagued by brake line corrosion which leads to brake failure. Here are the figures from a NHTSA complaint search using the keywords “brake line.”

Chevrolet models, model years 1999-2008: 1,372 complaints.

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GM Resists Recall for Brake Line Defect in Chevy Silverado, Other Vehicles

General Motors has finally responded to our May 13 request that it recall 6 million Chevy Silverados and other light trucks and SUVs. In a letter from Jeffrey Boyer, Vice President for Global Safety, GM is sticking to its longstanding claim that a brake line corrosion problem results from “wear and tear.” From Boyer’s letter:

Brake line wear on vehicles is a maintenance issue that affects the entire automotive industry. As with every vehicle part, our safety personnel regularly investigate brake line complaints for possible defects.

This statement is directly refuted by National Highway Traffic Safety Administration (NHTSA) data.  The kind of corrosion affecting GM vehicles does not plague the rest of the industry. In the only other situation with any similarity, Subaru last year undertook a recall.

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Tesla Enthusiasm for Battery Swap Wanes After Subsidies Disappear

Elon Musk IronManNLPC has extensively documented how Tesla Motors has taken advantage of market distortions to reap revenues – including government mandates, subsidies, and taxpayer support – not the least of which have been so-called “zero emission credits” from the state of California. But much of the revenue Tesla enjoyed last year – which often meant the difference between profit and loss – was credited based upon theoretical technological capabilities and not ones actually put into practice.

CEO Elon Musk has also relied on accounting gimmicks to enhance his bottom line over the last 18 months, during which a couple of quarterly earnings reports even showed a profit – albeit under non-Generally Accepted Accounting Principles. Those handsome returns were achieved in part thanks to a scheme administered under the California Air Resources Board in which additional zero emission credits are awarded to vehicle manufacturers based upon the ability for models to “fast … Read More ➡

Subaru Recalled Vehicles With Brake Line Corrosion; GM Should, Too

General Motors has still yet to acknowledge that it has a problem with brake lines that are subject to rust on many of its vehicles. Model year 1999 through 2003 trucks, primarily the Chevy Silverado and GMC Sierra, are currently under investigation by the National Highway Traffic Safety Administration (NHTSA) and multiple complaints have come in for newer models up to model year 2007. It has now been about a month since we notified GM and NHTSA of the issue and requested a recall of vehicles that are putting motorists in harm’s way. I now suggest that GM look at how Subaru handled a similar issue with its vehicles so that this serious safety issue gets resolved.

It is not debatable that GM has far more complaints than any other manufacturer for brake failure from brake lines that burst due to corrosion. Whether you do a Google search on the … Read More ➡

GM CEO Mary Barra Ignores Brake Corrosion Safety Issue

Barra photoWell, it looks like New GM is not much different than Old GM when it comes to addressing serious safety issues on its vehicles. The Associated Press reports that General Motors CEO, Mary Barra, claims that GM has not turned up any other major safety issues. I guess Ms. Barra feels that two tons of steel traveling at high speeds with brake lines that can burst at any moment is nothing to be concerned about. The continued denial by GM that there is no safety issue with their trucks that are prone to brake line corrosion proves that the company has a long way to go before they change a culture that puts profits ahead of motorists’ safety.

Last month we sent a letter to GM and Ms. Barra requesting that GM trucks that are prone to brake line rust be recalled. The problems plague Chevy Silverados, GMC Sierras … Read More ➡

GM Internal Investigation Does Not Absolve Management of Criminality

Brooke's carThe long-awaited General Motors recall report, which was compiled by attorneys with longstanding and lucrative ties to the company, has been released with few surprises. GM-hired attorneys claim that no high-level executives at the company were responsible for the deadly ignition switch recall delay that cost at least 13 people their lives. The report does nothing to vindicate GM. The company’s management must be investigated by the Justice Department.

The legal team responsible for the “investigation” was headed by Jenner and Block chairman, Anton Valukas. While Mr. Valukas is most often described as a former federal prosecutor by the media, the fact that Jenner and Block are long-time cronies of GM is not often mentioned. The company served as lead counsel for GM during its $15.8 billion IPO. Two former top GM attorneys were also partners at Jenner and Block, as reported by Reuters.

The fact that GM’s current … Read More ➡

GM’s Internal Investigation (Mary Barra’s Whitewash) Prompts Questions

Valukas photoIt is expected that GM’s internal investigation will absolve GM CEO Mary Barra of responsibilty for the deadly recall delay that resulted in at least 13 deaths and 31 injuries.

I don’t think anybody expects an investigation paid for by GM and conducted by lawyers with longstanding cozy relationships with GM to be anything but a whitewash. This only increases the necessity of NHTSA and Congress getting to the bottom of the delay. They owe it to the victims and the public.

People are tired of hearing leaders at the highest levels of responsibility claim that they were simply not aware.

Here are some questions for GM, NHTSA and Congress:

1) Does ignorance of this deadly defect reflect any better on GM’s senior executives than complicity? If nobody in GM’s senior leadership takes credit for this, doesn’t it create huge incentives for executives to remain ignorant of potentially deadly defects?… Read More ➡