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GM under harsh spotlight as Congress hearings begin

GM under harsh spotlight as Congress hearings begin

GM RECALL:Cherie Sharkey, left, weeps for her son Michael Sharkey who died in his used 2006 Chevy Cobalt in Dresden, NY, as she walks with Laura Christian, of Harwood, Md., birth mother of Amber Marie Rose, the first reported victim of the General Motors safety defect, on Capitol Hill in Washington, Tuesday, April 1, to represent their children at a news conference. The House Energy and Commerce Subcommittee on Oversight and Investigations will look for answers today from GM CEO Mary Barra about a faulty ignition switch and mishandled recall of 2.6 million cars that’s been linked to 13 deaths and dozens of crashes. Photo: Associated Press/J. Scott Applewhite

By Ben Klayman and Julia Edwards

WASHINGTON (Reuters) – U.S. lawmakers trying to establish who is to blame for at least 13 auto-related deaths over the past decade are expected to harshly question General Motors CEO Mary Barra on Tuesday afternoon over the automaker’s slow response to defective ignition switches in its cars.

Despite tougher laws enacted in 2000 and 2010 to encourage automakers and the National Highway Traffic Safety Administration (NHTSA) to aggressively root out safety concerns, it took GM more than 10 years to publicly acknowledge that it had a potentially fatal problem.

Since February, GM has recalled 2.6 million vehicles due to concerns about ignition switches that unexpectedly turn off engines during operation and leave airbags, power steering and power brakes inoperable.

Pressure intensified on GM to advise consumers to take the troubled cars off the road immediately and a growing list of consumer groups urged the automaker to establish a victims’ compensation fund that they think should top $1 billion.

At a press conference before Tuesday’s hearing by a House Energy and Commerce subcommittee, Representative Diana DeGette said, “If you own one of these recalled vehicles, park it immediately,” and make plans to get it fixed by a GM dealer.

DeGette, the senior Democrat on the Oversight and Investigations panel that will hear testimony from Barra at 2 p.m. EDT (1800 GMT), said she backed efforts to encourage GM to issue such a call.

GM has said repeatedly that the cars in question are safe to drive as long as the ignition key and no other items are attached to a key ring.

The company, however, has announced a total of nearly 7 million vehicles recalled so far this year for various safety issues, almost equivalent to the previous four years combined.

Meanwhile, Democrats on the House Energy and Commerce Committee floated a new memo on Tuesday saying its analysis of documents found that GM still has not reported to federal regulators many cases involving ignition-switch concerns registered by consumers and GM technicians.

“At the same time GM was receiving these consumer complaints, the company continued to deny any defect,” the House Democrats’ memo said. The memo was referring to 133 warranty claims, some dating from June 2003, with the “vast majority” unreported.

The memo noted that while automakers must provide a broad summary of warranty data to NHTSA, there currently is no requirement that they proactively submit such claims to the agency.

Families of victims killed in crashes involving GM cars held an emotional meeting with Barra in the company’s Washington offices on Monday night.

Laura Christian, whose daughter Amber Rose was killed in a 2005 Chevy Cobalt in Maryland, told Reuters after the meeting: “I pressed her (Barra) to consider whether she would take these cars off the road and she told me again how these cars were safe as long as you only had the one key (in the ignition with no other keys or fobs attached to a key ring). I debated that.”

Christian also said “everybody was crying the entire time” during the meeting. “There were horrific stories.”

HIGH STAKES

Documents that GM and NHTSA turned over to the House committee have provided new insights into GM’s practices, including their decisions to install ignition switches in Chevrolet Cobalts, Saturn Ions and other models that did not meet all of the company’s own specifications.

Some Republican aides on the committee have cautioned, however, that there were 60 specifications for the ignition switch alone and it is not clear what the significance is of one specification being below standard. The committee is sure to explore that question during the hearing.

Some in Congress are beginning to inquire as to whether more people died in cars outfitted with faulty switches, beyond the 13 identified by GM, as they review documents pointing to a redesigned replacement part that could also be substandard.

Barra, who became CEO in January, says in prepared testimony released by the committee that she “cannot tell you why it took years for a safety defect to be announced,” but she promised to get to the root of the problem.

NHTSA Acting Administrator David Friedman will also be on the hot seat on Tuesday afternoon, as many lawmakers are expected to ask why the U.S. regulatory agency was not more aggressive in identifying the problem and forcing GM to act.

The stakes are high for both Barra and GM. The hearings, coupled with a Justice Department criminal investigation and a series of lawsuits, could further hurt the automaker’s reputation among consumers and make for mounting legal fees.

GM’s stock was nonetheless trading up 39 cents at $34.81 in mid-afternoon trading on the New York Stock Exchange on Tuesday.

While the stock dropped 10 percent over the course of a week at one point in the aftermath of NHTSA opening its investigation, it has mostly recovered and is off only 1.4 percent since the first wave of ignition switch recalls was announced on February 13.

Industry analysts and GM dealers raised concerns that the recall could begin eroding sales.

“You can feel it’s starting to trickle down. You just wake up every morning and the first thing you hear is all about the GM recall,” said a Chevrolet dealer in Canton, Ohio, who was quoted in a Morgan Stanley research note on Tuesday.

The dealer suggested the bite on sales could take hold in April, the note added.

(Additional reporting by Eric Beech, writing by Richard Cowan; editing by Karey Van Hall, Tom Brown and G Crosse)

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