The economics of the GM recall
Chevrolet Cobalts are displayed at the Sierra Chevrolet auto dealership on March 2, 2010 in Monrovia, California. A power steering problem that has been linked to 14 crashes and one injury has prompted General Motors Company to announce that it is recalling 1.3 million compact cars throughout North America. An investigation of approximately 905,000 Cobalt models in the United States by US safety regulators reveals more than 1,100 complaints of power steering failures. Models being recalled includes the 2005-2010 model year Chevrolet Cobalt and 2007-2010 Pontiac G5 in the United States as well as the 2005-2006 Pontiac Pursuit sold in Canada, and 2005-2006 Pontiac G4 sold in Mexico.
General Motors CEO Mary Barra will appear before House and Senate subcommittees on Tuesday and Wednesday to answer questions related to how much the auto manufacturer knew about ignition switch problems which have been linked to at least thirteen deaths and the recall of 2.6 million vehicles.
Watch the House Energy and Commerce Committee's live video of Tuesday's hearing here at 2:00 p.m. ET.
Recalls in and of themselves aren’t a bad thing: some analysts think they can have an economic benefit by boosting trust between car owners and automakers.
In 2013, Americans saw a bumper crop of recalls – almost 22 million of them.
Here is a quotation from Barra's expected testimony on Tuesday:
"As soon as l learned about the problem, we acted without hesitation. We told the world we had a problem that needed to be fixed. We did so because whatever mistakes were made in the past, we will not shirk from our responsibilities now and in the future. Today’s GM will do the right thing. That begins with my sincere apologies to everyone who has been affected by this recall… especially to the families and friends of those who lost their lives or were injured. I am deeply sorry.
I’ve asked former U.S. Attorney Anton Valukas to conduct a thorough and unimpeded investigation of the actions of General Motors. He has free rein to go where the facts take him, regardless of the outcome. The facts will be the facts. Once they are in, my management team and I will use his findings to help assure this does not happen again. We will hold ourselves fully accountable. However, I want to stress that I’m not waiting for his results to make changes." - General Motors CEO Mary Barra