The auto industry’s current roster of infamous, recall-related scandals remained in the just-auto news this week as further revelations unfolded. Example: this article, confirming an aspect of the saga already well scrutinised by both regulators and media – air bag supplier Takata routinely manipulated results of inflator tests supplied to Honda. Just today, we learned US regulators, aka NHTSA, want GM to recall another 4.3m Takata inflator-equipped vehicles. To use an old media biz term, this story ‘has legs’ and it sure will run awhile yet.
That GM story today adds a new twist – automakers pushing back against what they regard as over-cautious regulators seeking to impose immensely costly further recalls on already beleagured vehicle makers – to this long-running saga which has already seen a long and drawn-out recall process, beginning initially in ‘hot ‘n’ humid’ territories and gradually rolling out pretty much world-wide. Along the way, evidence of Takata’s dubious manufacturing and shipping practices (eg dropping whole pallets of fragile inflators en-route to customers) and test result manipulation has surfaced, US politicians have grilled reluctant key executives (and NHTSA) on Capitol Hill, Takata’s betrayed top airbag customer, Honda, has dumped its long-serving supplier’s products for some future models and, still, the saga rumbles on – it is now the most story-populated Hot Topic we have ever maintained in just-auto‘s history.
GM, of course, has its own recall-related skeletons in the cupboard. You’ll recall the infamous ‘ignition switch’ saga where a defect took to long to identify (switch accidentally turned off too easy, cutting power to engine, steering and brakes, sometimes with fatal results), a proper fix was engineered and signed off BUT no new part number was assigned, leading to supply chain and dealer parts department chaos, a massive recall (still ongoing) and the need for suppliers to tool up to (re)produce a long obsolete component. Heads rolled, then-new GM CEO Mary Barra personally (and, I feel courageously) met relatives bereaved by her employer’s products, you know the rest of the story.
Which was updated only this week with news GM’s been back in federal court and, thanks to the latest ruling, will not have to face some recall-related claims from vehicle owners. Sensibly, I thought, the federal judge dismissed some claims brought against GM by customers seeking compensation for a drop in their vehicles’ resale values after a series of 2014 safety recalls including those for faulty ignition switches. Judge Jesse Furman dismissed racketeering and some state law claims plus claims from customers whose vehicles were not allegedly defective when sold because, he ruled, plaintiffs’ pursuit of damages based purely on perceived harm to GM’s brand following more than 70 recalls in 2014 was “unprecedented and unsound”. The so-called “brand devaluation theory” would open the door to a flood of claims by consumers who bought any product from a manufacturer subsequently hit by a scandal or found to have produced an unrelated defective product, he added. You can almost hear the sighs of relief in GM’s legal department.
Nonetheless, Furman said he would allow plaintiffs to pursue damages involving out of pocket costs connected to the recalls while some plaintiffs could pursue damages for the difference between what they paid for the vehicles and what they would have been worth without the alleged defect. Like the Takata saga, GM’s is not over yet, the story will continue to run and run; the lawyers will be busy awhile yet.
To the astonishment of some (me included), we learned this week Hyundai Motor’s high priced Genesis G90 is outselling many similarly sized luxury cars worldwide, including the Porsche Panamera, Audi A8/S8, Jaguar XJ and Maserati Quattroporte. Is an Asian premium brand about to, finally, really have a proper go at giving the established European brands a real run for the money? Having pedaled a couple of top Kia sedans, broadly on the same building blocks as the latest Genesis line, around California a couple of years ago, I would not rule it out. At a minimum, the K900 is a fair substitute for the budget-challenged who are really aiming for a Lexus, BMW or Mercedes; this Genesis success suggests the Korean group is getting closer to its target.
We continued our post-Brexit ‘what-if’ analysis this week with a look from Our Man in Asia on possible effects on the UK’s automakers. And, staying with analysis, we published part deux of our in-depth look at Ford’s future product plans. Another really good read I recommend for the weekend.
Have a good one.
Graeme Roberts, Deputy Editor, just-auto.com