GM Ordered 500,000 Replacement Ignition Switches Months Before Recall

Illustration for article titled GM Ordered 500,000 Replacement Ignition Switches Months Before Recall
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1st Gear: When Being Proactive Goes Wrong

We'll continue to hear more terrible things about GM as lawyers suing the company release a steady stream of seemingly damning details.

Today's bit of news from the WSJ does seem fairly awful:

The email exchanges took place in mid-December 2013 between a GM contract worker and the auto maker’s ignition-switch supplier, Delphi Automotive PLC. The emails indicate GM placed a Dec. 18 “urgent” order for 500,000 replacement switches one day after a meeting of senior executives. GM and an outside report it commissioned have said the executives discussed the Cobalt at the Dec. 17 meeting but didn’t decide on a recall.

They didn't announce the recall of any cars until February 7th. GM says they submitted a timeline of events that was accurate and that they weren't responsible for disclosing the parts order.

That may be true and, honestly, it isn't such a terrible idea that you order some backup parts if you think you've got a recall coming. You don't want to be like Jeep, who announces a recall and then doesn't have any way to make the fix.


On the other hand, GM said it didn't make a decision to recall the cars until January 31st and yet had already ordered that many parts?

2nd Gear: Why You Shouldn't Expect A Mazda RX-Anything

Illustration for article titled GM Ordered 500,000 Replacement Ignition Switches Months Before Recall

Mazda produces some of the best internally combustion engines in the world and some of the best handling non-premium cars in the world, no matter the segment. So what's the problem? Mazda doesn't have a safety net.

In college I knew people who had very little risk of failure, who spent carelessly and studied things with no promise of making a career after they graduated. They all had parents who could bail them out if things went wrong. And then there were the students focusing on getting internships instead of getting laid, who saved despite their meager income, and strived to succeed. They didn't have such parents.


Mazda is the second kid. Man, they'd love to build an RX-9 and do all sorts of cool shit, but they can't, because if they fuck it up they're fucked.

That's the thrust of this interview with Mazda CEO Masamichi Kogai in Automotive News this morning:

"It's difficult for us at present to further expand our lineup," Kogai told Automotive News at the company's headquarters here. "The company is still in the process of improving its financial structure. We want to focus our limited resources on the Skyactiv products that we have today."


Mazda is also uniquely benefitting from the fact that they have very little manufacturing outside of Japan, which makes the lower yen great for them now but sets them up for difficulties if that flips.

Kogai, an avid baseball fan and former pitcher, draws from the diamond when planning his product portfolio. The truly successful company doesn't rely on just one product, just as a pennant-winning team doesn't rely on a star power hitter. "We don't need a home run, if each player hits a single," he said.


Oh well, at least we got a new Miata.

3rd Gear: Senators Want To Criminally Investigate Takata

Illustration for article titled GM Ordered 500,000 Replacement Ignition Switches Months Before Recall

No one goes to jail. Make enough money, no one goes to jail. Sure, Jamie Dimon had to fork over $1 billion, but that dude ain't going to Rikers. I guess Martha Stewart was the exception.

Now Senators want a real criminal investigation of Takata for its handling of a massive airbag crisis.

U.S. Sens Richard Blumenthal, D-Connecticut, and Ed Markey, D-Massachusetts, on Friday called on the U.S. Department of Justice to open a criminal investigation of Takata after The New York Times reported that in 2004, the Japanese company destroyed air bags and data from test results that had raised concerns with engineers.

The Times reported that after Takata received a report a decade ago that one of its air bags failed and sent metal shrapnel flying at a driver, Takata conducted secret tests at its North American headquarters in Auburn Hills after normal work hours, and on weekends and holidays. According to the report, Takata ordered lab technicians to delete testing results from computers and destroy the faulty inflators. The company did not alert federal safety regulators about the problem.


Takata disagrees with the NYT report but it doesn't matter as the smart money is on the Justice Dept. coming down hard.

4th Gear: Honda To Focus On Quality, Not Sales

Illustration for article titled GM Ordered 500,000 Replacement Ignition Switches Months Before Recall

The pursuit of higher sales rarely results in higher quality. Look at Toyota. Look at GM. Look at Volkswagen. Profits are actually a better goalpost.

It's therefore heartening to hear that Honda — a company that's generally seemed smarter the last few quarters — is focusing on quality and not sales.


Per Reuters:

Honda Motor Co's CEO said he would prioritize quality improvements over the company's target of selling 6 million cars in the year starting April 2016, as the automaker recalls millions of cars to fix potentially defective air bags.

Concerns about potentially defective air bags made by Takata Corp have led to recalls of millions of cars by 10 automakers in the United States, mainly Honda.


It's not entirely an altruistic concern. Remember, quality is how Honda made its money in the first place.

5th Gear: A Note Of Doom

Illustration for article titled GM Ordered 500,000 Replacement Ignition Switches Months Before Recall

The market is improving, unemployment is down, car sales are up. So what's the problem?

I'll let the Freep lay it out for you:

Yet a substantial portion of this growth is fueled by three trends, any of which will reveal just how well the industry learned the lessons of 2009.

First, the average length of a new car loan is now 67 months, the second-longest ever, according to Second, leasing once again accounts for more than 25% of all new vehicle transactions, the highest level since the Great Recession. Finally, auto finance companies, banks and credit unions are approving more subprime loans to people with checkered credit histories.


This all sounds ominous but it reflects the realities of our extremely slow-but-steady recovery. People have jobs and are making money and are participating in the labor force but, for complex reasons, they have bad credit or are worried about taking on a huge monthly payment.

This is simultaneously rational and irrational, reflecting a short-term prudence that feels wise but is less efficient over the long-term. Still, I think concerns are overblown until we see massive defaults because, though a massive market correction and the resulting layoffs could blow up the whole thing, a massive market correction would blow up the whole thing anyways.


It's the fall that's gonna kill you.

Reverse: Cool

On this day, the patent office awards U.S. Patent No. 743,801 to a Birmingham, Alabama woman named Mary Anderson for her "window cleaning device for electric cars and other vehicles to remove snow, ice or sleet from the window." When she received her patent, Anderson tried to sell it to a Canadian manufacturing firm, but the company refused: The device had no practical value, it said, and so was not worth any money. Though mechanical windshield wipers were standard equipment in passenger cars by around 1913, Anderson never profited from the invention.



Neutral: Was GM Being Thoughtful Or Conspiratorial? It looks bad, but is it bad?

Photo Credit: Getty Images


can everyone just stop looking at the unemployment rate and the Dow jones as the indicator of the economy. if your old enough to vote then you should have a better understanding of how the economy works and how we arrive at numbers like unemployment and inflation. Like if you run out of unemployment benefits you dont count as unemployed any longer, if you lost your job and had to take a part time low paying service sector job that cant pay the bills you just count as employed. So because money is cheap and you can get a 1.99% car loan and you can afford the super low payment due to crazy long term timelines that does not mean you are helping the economy. when people go out and load up their credit cards for Christmas because they dont have the cash that is not a good thing. People spending money they dont have because stupidly low artificial interest rates is only creating a bubble. We are crack heads high on cheap money from the fed.....It cant last forever and the downside will be much worse then 2008.