GM Criminal Probe of Recalls Complicates Barra Turnaround
By Jeff Plungis, Jeff Green and Del Quentin Wilber Mar 12, 2014 4:26 PM ET
The criminal investigation that opened yesterday into General Motors Co. (GM)’s handling of an ignition flaw linked to 12 deaths adds to legal challenges that threaten to overshadow the company’s turnaround.
GM, the largest U.S. automaker, is now at the beginning of a potentially years-long road dotted with inquiries, lawsuits, government fines and public skepticism. Besides the U.S. Justice Department probe, GM must answer to Congress, the Federal Bureau of Investigation, the Transportation Department and lawyers the company hired to investigate itself.
Toyota Motor Corp. (7203) is still being examined over recalls in 2009-10 related to reports of unintended acceleration in some cars. GM similarly faces repercussions for waiting to recall 1.6 million vehicles last month, even though records show it was aware as far back as 2004 of ignition switches that could slip out of position, cutting off power and deactivating air bags. The crisis arrives weeks after Mary Barra took over as chief executive officer amid rising investor and consumer optimism as GM shook off the last vestiges of its 2009 bankruptcy.
“Barra is getting her feet thrown right into the fire,” Dave Sullivan, an industry analyst with Southfield, Michigan-based AutoPacific Inc., said in an interview. “There’s no way she is going to come out of this looking like some kind of hero. The best thing is to be honest and upfront and hopefully put this to bed as quickly as possible.”
GM is fully cooperating with the National Highway Traffic Safety Administration, Greg Martin, a spokesman for the Detroit-based company, said today. “We welcome the opportunity to help the agency have a full understanding of the facts,” he said.
more...
http://www.bloomberg.com/news/2014-03-12/gm-criminal-probe-of-recalls-complicates-barra-turnaround.html