It hasn’t been long since President Obama proclaimed a bailout victory for General Motors, but the automaker is back in the news. It seems that GM knew about an ignition switch defect for 9 years and did nothing about it. At least 13 Americans died driving Chevys as a result.
This revelation reminds me of the Toyota brake crisis in 2009-2010, when the company was accused of ignoring a faulty electronic throttle, ultimately causing some cars to accelerate out of control and klling drivers. The mainstream media, big labor, and the Democrats pounded the Japanese carmaker for months, even demanding that the CEO testify before Congress. Perhaps you remember that former Toyota attorney and self-described whistleblower Dimitrios Biller claimed to have evidence of widespread corporate negligence. You may recall when James Sikes claimed that his 2008 Prius began to accelerate on its own and could not be stopped. At one point, US Secretary of Transportation Ray LaHood declared, “We’re not finished with Toyota…” and even advised Toyota owners not to drive their cars.
In the end, Biller’s claims were dismissed and he was ordered to pay $2.6 million for confidentiality breaches. Sikes’ story turned about to be a fraud as well. And on February 8, 2011, the long-awaited US government investigation showed no link between electronic throttles and unintended acceleration in Toyota vehicles. Most of the customer complaints turned out to be driver error and the legitimate ones were tied to sticky floor mats, not a mechanical cover-up. Toyota’s long-term reputational and sales losses will never be fully known, but they were astronomical, and certainly not proportional to the company’s negligence in the case.
But now it’s GM’s turn. Amidst the current crisis, CEO Mary Barra claims she’s personally directing the recall of 1.37 million GM cars. According to a company spokesperson, “GM is focused on ensuring the safety and peace of mind of our customers involved in the recall. Our principle throughout this process has been to put the customer first, and that will continue to guide us.” All of this sounds nice, but terms of the Obama-brokered bankruptcy shield GM from liability stemming from incidents prior to 2009. This means that many or perhaps all of the families who lost loved ones as a result of GM’s negligence may recover nothing, even though some of the GM representatives negotiating the bankruptcy were probably aware of the problem.
What I don’t hear now is the NHTSA constantly demanding answers and massive recalls from GM. I don’t hear US Secretary of Transportation Anthony Foxx advising owners of GM vehicles not to drive them. Sure, the regulators are going through the motions. I see only modest coverage of this scandal in major print and television outlets.
Why the double standard? Toyota is a foreign-owned company and has built high quality cars in Japan and in the US for decades largely without union interference. On the other hand, the UAW owns a significant chunk of GM and the carmaker must succeed to justify the Obama bailout. The Administration has a personal stake in this debacle and will do all it can to minimize its effects.
It will be interesting to see how this case unfolds, but it already smells of cronyism.