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GM saved only a dollar per car by avoiding defective switch redesign

Published time: April 02, 2014 20:27
Reuters / Pascal Lauener

Reuters / Pascal Lauener

Instead of recalling defective vehicles when it noticed they were built using flawed ignition switches, General Motors opted not to make any changes due to the fact that it would’ve cost an extra dollar per car, a new report by Reuters states.

The news service says it was able to obtain a chain of emails circa 2005 that depicted GM engineers discussing the faulty switches – originally discovered in 2001 and eventually linked to more than a dozen deaths. The emails reportedly show that replacing the part in the 2.6 million affected cars would’ve cost about 90 cents per vehicle, in addition to $400,000 in tooling costs typically spread out over multiple years.

So far, the defective switches have been linked to at least 13 deaths, and have been flagged for potentially disabling airbags, power brakes and steering.

During a Tuesday hearing between GM CEO Mary Barra and the US House Committee on Energy and Commerce, Rep. Diana DeGette (D-Colorado) also cited another GM document from the same time period showing the replacement cost would’ve been even lower, at 57 cents per car. These documents, however, have yet to be released.

For her part, Barra called the notion that GM would choose not to recall defective cars for cost reasons “unacceptable” and “very disturbing,” adding “that is not the way we do business in the New GM."

According to Reuters, the 2005-era emails show engineer John Hendler saying the team would continue to use the switches even though the maker of the part, Delphi Automotive, acknowledged they did not live up to GM’s own performance standards. GM did move to change the switch in 2006, but that process also fell short of the company’s standards.

Barra explained that one of the major changes made at GM since its 2009 bankruptcy is that the company has shifted towards focusing on consumers, a notable swing from the cost-oriented structure associated with the previous decade.

Today, if there is a safety issue, we take action,” said Barra, according to Time. “If we know there is a defect, we do not look at the cost associated with it, we look at the speed at which we can fix the issue.”

Still, the Detroit Free Press noted that Barra generally dodged getting into specifics during the hearing, repeatedly saying that former US Attorney Anton Valukas is currently spearheading an independent, internal investigation into the matter.

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