It took just a month for "a seemingly routine recall of older cars for ignition switch problems" by GM to become "the biggest crisis the Detroit automaker has faced in years," The Detroit News says in a Page One main story.
National automotive writer David Shepardson and GM beat reporter Melissa Burden run through the firm's spreading challenges:
- A criminal investigation by Justice Department prosecutors.
- Hearings in Congress.
- Scrutiny from federal regulators.
- A class-action suit, filed Friday by two Texas law firms.
- Mounting negative publicity over whether GM recalled the cars in a timely manner. led cars.
- A Canadian government inquiry into a June 2013 death that could be linked to the defects.
Investors are understandably skittish. GM's "stock price fell 9.6 percent this week," the article says.
GM is recalling 1.62 million cars linked to 12 deaths and 31 crashes in which air bags didn't inflate.
The automaker has apologized for its handling of the recall and hired two outside law firms to investigate the company’s response to ignition switch problems that were spotted as early as 2001. . . .
Several executives at the Detroit automaker have privately compared the firestorm over its decision to delay recalling 1.62 million Chevrolet Cobalts and other cars to the maelstrom faced by BP over the Gulf of Mexico oil disaster or the manufacturer of Tylenol after the 1982 deaths of seven people who took cyanide-spiked painkillers.
GM likely will face more lawsuits with all the publicity.
In the hottest seat during this Tempest* is Mary Barra, who moved into the CEO's 39th floor Renaissance Center suite two months ago.
Barra, the first woman to lead an automaker, is being scrutinized by Wall Street, GM owners and the public who might be thinking of buying a car.
Shepardson speaks with a Washington crisis manager about GM's performance. He and Burden also quote Warren Buffett, Chrysler's CERO and Wall Street analysts.
* Capitalized as a winking reference to a 1961-91 Pontiac model.
