GM Recalls and Culpability

[Robert.Boston]

Back to the topic of GM...

I was thinking yesterday about the role of the GM dealers in all of this. "What role?", you might fairly ask.

In many of the debates about the importance of enshrining auto dealer's spot in the automotive food chain, I've heard auto dealers claim that the regulations are "public health and safety" requirements. It's fairly transparent why they would try to claim that status, as it's the only way to dodge the Interstate Commerce Clause of the US Constitution. (E.g., Maine bans importing of firewood from other states; this ban is legal because its stated intent is to prevent the spread of insects/fungus/diseases that would harm Maine's trees.)

So, back to the Cobalt safety issue: where were the dealers? If the dealers are supposedly the safety advocates for their customers, why aren't there records of letters/emails/phone calls from angry dealers to GM?

In my view, the dealership model actually made the GM problem worse. GM's customers are their dealers, not end-use customers. Dealers want low cost cars to put on their lots, and dealers are perfectly happy to earn extra profit doing repairs under warranty or recalls. By contrast, Tesla's customers are drivers. The lack of a middleman means that there is no mis-alignment of interests, and that there IS a direct line of communication between drivers and the manufacturer.

Perhaps it's too much to hope that we can use this incident to outlaw auto dealerships, but we can certainly use it to prove that there is no public safety element to auto dealer protection laws.

 

[Chickenlittle]

Back to the topic of GM...

I was thinking yesterday about the role of the GM dealers in all of this. "What role?", you might fairly ask.
Perhaps it's too much to hope that we can use this incident to outlaw auto dealerships, but we can certainly use it to prove that there is no public safety element to auto dealer protection laws.

I hope not for two reasons
1. Dealers paid for their business would not want to interfere with that
2. Dealers are a lead weight around ICE manufacturers. Not in tesla interest to eliminate that

 

[Auzie]

Lawyer a good guy, job well done

It is interesting that the defect was not disclosed by GM nor was it discovered by Gov regulators or transportation safety agencies.

Instead public knowledge came about because an attorney who sued GM on behalf of the family of a driver who died in a crash, obtained thousands of documents from GM and took the depositions of several GM engineers.

Lance Cooper, the attorney, also hired an engineer, Mark Hood, a veteran investigator of the engineering of airplanes, cars, trains and medical devices and gave him a task of analyzing the crash cause.

Mr.Hood compared the car switch with the identical one that he purchased from GM dealership, and identified the difference that eluded GM internal investigations. That set in motion GM recalls and most likely saved more lives.

 

[brianman]

It is interesting that the defect was not disclosed by GM nor was it discovered by Gov regulators or transportation safety agencies.

Instead public knowledge came about because an attorney who sued GM on behalf of the family of a driver who died in a crash, obtained thousands of documents from GM and took the depositions of several GM engineers.

Lance Cooper, the attorney, also hired an engineer, Mark Hood, a veteran investigator of the engineering of airplanes, cars, trains and medical devices and gave him a task of analyzing the crash cause.

Mr.Hood compared the car switch with the identical one that he purchased from GM dealership, and identified the difference that eluded GM internal investigations. That set in motion GM recalls and most likely saved more lives.

Regardless of motivations, this shows that GM isn't fit to design/build/deliver cars.

 

[Auzie]

Regardless of motivations, this shows that GM isn't fit to design/build/deliver cars.

It will be hard for GM to dig itself out of this hole. I will not be surprised if there is a bankruptcy on the cards again, say in few years.

There is a new class action law suit against GM, for $10 billion. 'A new lawsuit says General Motors Co should compensate millions of car and truck owners for lost resale value, potentially exceeding $10 billion, because a slew of recalls and a deadly delay in recalling cars with defective ignition switches has damaged its brand.'

 

[Robert.Boston]

It will be hard for GM to dig itself out of this hole. I will not be surprised if there is a bankruptcy on the cards again, say in few years.

There is a new class action law suit against GM, for $10 billion. 'A new lawsuit says General Motors Co should compensate millions of car and truck owners for lost resale value, potentially exceeding $10 billion, because a slew of recalls and a deadly delay in recalling cars with defective ignition switches has damaged its brand.'

IANAL, but that class action suit seems frivolous. There's no evidence that GM sales have been harmed, and any car directly affected will be made right under the recall. This is just about lawyers trying to extract money.

 

[pz1975]

IANAL, but that class action suit seems frivolous. There's no evidence that GM sales have been harmed, and any car directly affected will be made right under the recall. This is just about lawyers trying to extract money.

I agree with what you are saying on the surface, and especially about lawyers trying to extract money, but I think this case is valid. Psychologically, I am sure people will be less likely to buy a used (what would seem as tainted) car with the negative reputation as those GM cars even though they are technically "fixed". People will wonder what else could be wrong with them as obviously the issue is a systemic one with GM and there is a much higher likelihood of other potentially dangerous problems that just haven't been found yet than with other similarly aged/priced used cars. As a result, the demand goes down and resale price goes down.

 

[Auzie]

IANAL, but that class action suit seems frivolous. There's no evidence that GM sales have been harmed, and any car directly affected will be made right under the recall. This is just about lawyers trying to extract money.

Frivolous or not, it is hammering GM while it is down. It could be the straw that broke the camel’s back.

In the court of public opinion, it might not be so frivolous. GM brand is irreparably damaged. New York Times had more than 20 articles on the subject. The internal workings and flaws of GM are being publicly scrutinized.

Back in Feb2013, when John Broder attacked Tesla in NYT article, I really was not sure if Tesla would survive that single blow. It could have gone either way as Tesla was then very small and its brand was just starting to gain recognition. Tesla strongly defended itself against the attack. Its CEO was very public and vocal in refuting the article. Data logs were published.

But much more valuable defense was provided by Tesla’s loyal customers. Tesla customers were sufficiently moved to defend their car when Tesla needed such defense the most. What can possibly move people so much to recreate the trip just to refute the newspaper article? Some powerful force was at play, not in any religious sense. I am still baffled as to what got hold of me at the time to wake me up at night just to follow their trip on Twitter.

There is no GM defense coming from anywhere to all these public attacks and scrutiny. Public statements by GM CEO on the issue sound very unconvincing to me. More of the same game. I wish to be wrong but I do not see much that GM can build on from here.