In U.S., GM recalls 2.7 million vehicles

2014 total tops 11 million, near record

An autoworker inspects finished sport utility vehicles Tuesday at the General Motors plant in Arlington, Texas. GM has recalled more than 11 million vehicles since January.
An autoworker inspects finished sport utility vehicles Tuesday at the General Motors plant in Arlington, Texas. GM has recalled more than 11 million vehicles since January.

DETROIT -- General Motors recalled an additional 2.7 million vehicles in the U.S. on Thursday as an internal investigation into safety matters at the nation's biggest automaker turned up more problems with some of the cars it built over the past decade.

The latest recalls bring GM's total for the year in the U.S. to more than 11 million cars and trucks, close to its annual recall record of 11.8 million vehicles, set in 2004.

The auto industry also is on track to set a single-year record for recalls. Auto companies have recalled 15.4 million vehicles in a little more than four months. The old single-year record for recalls is 30.8 million vehicles in 2004. Toyota, Ford and Chrysler also have announced sizable recalls this year.

Several factors are behind the industry's recall binge. GM is reviewing all of its vehicles for safety concerns after the recall earlier this year of 2.6 million older small cars that have defective ignition switches. GM knew about the switch problem for a decade before issuing a recall. The company links the problem to 13 deaths and faces multiple investigations, including one by the Justice Department, over its handling of the matter.

GM Chief Executive Officer Mary Barra has asked Jenner & Block LLC Chairman Anton Valukas, who served as the Justice Department's examiner of the downfall of Lehman Brothers Holdings Inc., to help lead the automaker's internal investigation of the ignition-switch recall along with GM general counsel Michael Millikin. She also has asked for a review by lawyer Kenneth Feinberg, who determined compensation for survivors of the Sept. 11, 2001, and Boston Marathon terrorist attacks, to work on what GM should do for victims of the crashes.

Industrywide, automakers are moving faster to fix problems than they have in the past in a bid to avoid bad publicity and record fines from government agencies.

Jeff Boyer, the new safety chief at GM, said in an interview with The Associated Press that the company is looking at cases that were under review in its system and moving to resolve them as fast as possible. GM, he said, has added 35 people to its recall-review team.

"We're not waiting for warranty trends to develop over time," Boyer said. "It's not only about frequency, it has to be about the seriousness of the potential defect as well."

The Detroit automaker will take a $200 million charge this quarter, on top of a $1.3 billion charge in the first quarter, mostly to cover the repairs.

"We have redoubled our efforts to expedite and resolve current reviews in process and also have identified and analyzed recent vehicle issues which require action," Boyer said in a news release. "These are examples of our focus to surface issues quickly and promptly take necessary actions in the best interest of our customers."

The largest of Thursday's recalls shows how GM is behaving differently. The company is recalling 2.4 million Chevrolet Malibu, Pontiac G6 and Saturn Aura midsize cars from the 2004 through 2012 model years because the brake-light wires can corrode, causing the lights to fail. GM says it knew of the problem nearly six years ago, but previously only issued a bulletin telling dealers of the problem and fixed a small number under a service campaign.

GM said it knows of several hundred complaints, 13 crashes and two injuries caused by the problem.

Overall, the industry's approach to recalls is changing. Bob Carter, Toyota's U.S. automotive operations chief, told analysts last month that vehicle owners can expect more frequent recalls because the regulatory and competitive environments have changed. Instead of recalling cars for known defects, companies are now "recalling vehicles to change problems that we anticipate might happen," Carter said.

It's also generated a shake-up in the ranks, with two top engineers leaving the company, two more suspended with pay and Boyer being appointed to oversee safety.

GM shares fell 58 cents, or 1.7 percent, to close Thursday at $34.36. The latest charge takes "off the table" GM's goal of a 10 percent earnings margin before interest and taxes in North America in the second quarter, Joseph Spak, an analyst with RBC Capital Markets, said in a note to investors Thursday. "Given greater focus on quality and recalls, we believe it's fair to assume warranty accruals have to be raised which is an added cost of business," he wrote.

Other GM recalls announced Thursday include:

• More than 140,000 Malibus from 2014, where a software problem in the brake-control computer can disable the power brakes. That means drivers would have to push the brakes harder to stop, and stopping distances would increase.

• Nearly 112,000 Chevrolet Corvettes from 2005 through 2007 because they can lose low-beam headlights. GM says that when the engine is warm, an electrical housing can expand and bend a wire, causing it to break. GM also will repair Corvettes from 2008 through 2013 if owners have the problem.

• 19,000 Cadillac CTS sports sedans because the windshield wipers can fail after the cars are jump-started and the wipers are stuck by ice and snow.

• 477 Chevy Silverado and GMC Sierra pickups and Chevrolet Tahoe SUVs. A suspension part can detach from the steering and cause loss of steering. GM has offered to tow the trucks to dealers.

Thursday's recalls also cover about 290,000 vehicles in Canada, Mexico and other countries, raising the global number of recalled vehicles to more than 2.9 million.

Information for this article was contributed by Tom Krisher and Dee-Ann Durbin of The Associated Press; by Tim Higgins, Jeff Plungis and Jeff Green of Bloomberg News; and by Jerry Hirsch of the Los Angeles Times.

A section on 05/16/2014

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