GM crisis sparks scrutiny: NHTSA relies on imperfect recall system to police vast auto industry

Leann Darrow has been waiting on her General Motors dealership for more than a month to get the defective ignition switch on her 2005 Chevrolet Cobalt replaced. She's been nervous about driving the car, but as of Monday, she was still waiting for an appointment to open.

"They told me they have over 150 vehicles on the waiting list and have received only five ignition switches," said Darrow, 53, of Pittsfield, Mass. "They were unable to tell me where I am on the waiting list ... unbelievable."

Darrow is anxious to get her car fixed because it has lost power while she has been driving it on several occasions.

"I am not in a big city, we are a little bit in the sticks. I won't take my car on any long-distance drives," Darrow said. "I am really disgusted with GM."

Darrow's frustration illustrates how the recall system often falls short of a main goal, fixing vehicles quickly. About three in four ultimately get repaired, but it takes time. And for older vehicles, like the 2.6 million small cars that carry GM's defective switch, the repair percentage falls dramatically. Neither regulators nor companies can easily find people who are often the second or third owners of an older car.

GM ignition switch timeline: How bureaucracy fumbled a deadly defect

More than 3.5 million cars are listed for sale online now with open safety recalls, according to current figures from Carfax, which conducts extensive research into used car sales. "Right now, there are almost 36 million cars on the road that have an unfixed recall. About 10 percent of those were for sale online just last year alone," said spokesman Christopher Basso.

The decades-old recall system has drawn fire for years but is now facing perhaps its most intense scrutiny ever. As GM car owners and dealerships wait for more new switches from a supplier, the automaker is scrambling to explain why it took more than 10 years to issue a recall that could have saved lives. The National Highway Traffic Safety Administration, the federal agency in charge of recalls, is also under fire from Congress and safety advocates for not recognizing the problem years earlier and forcing a recall years ago of the switches, now blamed for 13 deaths and at least 47 crashes.

Congressional committees and the Justice Department are investigating, with criminal penalties possible. One legislative proposal, designed to give the system more teeth, would increase the maximum civil fine to $300 million from $35 million for an automaker's failure to inform NHTSA of safety defects. Last month, the agency announced the maximum $35-million fine for GM.

Safety advocates say NHTSA needs more power and staff to police the massive industry and performance of 250 million vehicles on the nation's roads. The agency has defended itself before two congressional committees, saying the problem would have been recognized sooner had GM been more forthcoming with vital information.

GM says it has overhauled its system for recognizing and acting on safety problems earlier, including creating an executive committee in charge of recalls and creating a new global safety chief. An independent internal investigation ordered by GM CEO Mary Barra is expected to be released this week, along with potential news of a victims' fund.

The current recall system is a shared responsibility between NHTSA and automakers, which are expected to notify regulators and the public of safety issues and to initiate voluntary recalls. NHTSA also conducts its own research into crashes and traffic data and also can order recalls. The system broke down with GM and NHTSA failing together, and each separately, to decide to recall defective switches that first showed problems in 2001. GM did not issue the first of several recalls for the switches until February. Safety advocates and members of Congress are demanding reform and more accountability.

Fred Upton, a St. Joseph Republican, and chairman of the House Energy and Commerce Committee, said his committee's investigation into the recall could lead to changes in NHTSA's regulatory powers.

"We know NHTSA did not identify the problem, but we don't fully know why," Upton told the Free Press. "Right now, it is still too early to tell if and what changes need to be made."

'Shared responsibility'

NHTSA has said before several congressional committees this year that the burden is on automakers to monitor defects and report them within five business days if motorist safety is at risk.

Critics say the agency relies too much on auto companies to self-report problems. But NHTSA is dwarfed by the sprawling industry it regulates. With just 591 employees, it is responsible for overseeing the safety of all vehicles on the nation's roads. The agency's Office of Defects Investigation, which reviews more than 45,000 complaints annually, mostly from consumers, has 51 people.

The agency also points out that its mission is more about promoting driver safety and less about policing safety defects. NHTSA says it gets more bang for its buck and saves more lives investing in safe driving campaigns, such as nationwide seat belt, anti-texting and anti-drunken driving promotions. Regulators say they need the industry to self-report safety issues and to reliably initiate its own safety recalls for the system to work.

"The bottom line is that safety is a shared responsibility," said Transportation Secretary Anthony Foxx, whose department oversees NHTSA. "There are some situations when automakers are in a better position than NHTSA to know information."

The defective switches are a problem because they allow some ignitions to slip into the off or accessory position if jostled by a driver's knee or if weighted down by heavy objects hanging from a key chain. This is dangerous because that shuts off the vehicle, sometimes traveling at high speeds, and disables power steering and air bags.

GM failed to issue a recall for more than 10 years when some engineers knew there were problems. It also created problems in 2007 when it remanufactured the defective part but neglected to change the part number, causing confusion and adding to suspicions of a cover-up. GM is replacing all the switches now in all the cars because it's difficult to tell good from bad switches because they share the same part number.

Since the switch recall in February, GM has been sifting through piles of old data and uncovering multiple new recalls for millions of its existing vehicles. The automaker -- which already has issued more recalls this year than any other full year in its history -- warned investors last month to expect even more recalls throughout the summer. GM also reported late last month that only 47,000 of the 2.6 million cars with defective ignition switches have been fixed as new parts arrive slowly from the factory and dealerships nationwide schedule appointments.

"We're not done in terms of understanding how we might best reach out to customers," said Jeff Boyer, GM's first-ever vice president of global vehicle safety. "We're exploring some new avenues on how we can get in better touch with those customers."

Connection missed

Safety advocates complain that NHTSA doesn't have enough resources to adequately police the industry. But documents indicate some NHTSA officials knew of problems with air bags not working in some of the same models with the defective ignition switches. But no one made the connection at the time that defective switches were the reason air bags failed to deploy in some crashes.

However, NHTSA said May 16 that if GM had informed the agency of a memo the automaker received from a supplier, Continental, in 2009, that information would have sparked a new investigation into the ignition switches. The memo from Continental, which supplies air bags and the software that controls them, clearly linked the failure of GM's air bags in some crashes to the failure of ignition switches, which can turn the car off when they fail.

"So GM engineers knew about the defect. GM investigators knew about the defect. GM lawyers knew about the defect. But GM did not act to protect Americans from that defect," Acting NHTSA Administrator David Friedman said May 16 when the agency announced GM had agreed to pay a $35-million fine.

On the industry side, there have been recent examples of companies' not cooperating with regulators even though problems were identified by drivers and known by the companies, including from Toyota and Chrysler in recent years. Toyota was fined the maximum civil fine for not cooperating with NHTSA in 2009 and 2010 about claims of sudden unintended acceleration with some of its vehicles. The company this year agreed to pay $1.2 billion in fines to settle criminal charges with the Justice Department over the scandal.

Last year, Fiat Chrysler CEO Sergio Marchionne fought back when NHTSA ordered a recall of Jeep Grand Cherokees and Jeep Liberty SUVs with rear-mounted gas tanks the agency says are at risk for fiery rear-end collisions. Instead of a recall, Chrysler agreed to conduct a "safety campaign" to install trailer hitches for added protection, but it still denies a defect exists.

The recall system might be changing slowly on its own as companies want to avoid the problems faced by GM and Toyota.

Automakers recalled nearly 28 million vehicles in 2013, the most of any year since 2004 (33 million). Automakers also are deciding to recall more vehicles immediately after they discover defects rather than waiting for NHTSA to start an investigation. GM has initiated a wave of recall campaigns in the past several weeks. In 2013, 72 percent of vehicle recalls were initiating by automakers, up from 52 percent in 2003, according to NHTSA data.

A review of the agency's budget, staffing and interviews with experts and industry leaders reveals NHTSA as an imperfect agency that, despite its flaws and strained resources, has nudged the industry and drivers in the direction of safer vehicles.

In the U.S., traffic fatalities have declined from 44,525 in 1975 to 33,516 in 2012 even as the U.S. population has increased by almost 50 percent. To be sure, automakers are manufacturing safer vehicles, and the advent of front and side air bags, among other safety innovations, has saved lives.

But over the years, NHTSA has devoted more resources to raising driver awareness of dangerous habits -- such as drinking and driving -- than to vehicle safety research.

"Human behavior remains the leading cause of highway crashes and deaths," Friedman said. "These programs have shown enormous success over the years in driving down the number of deaths involving alcohol and driving up the percentages of vehicle occupants who wear seat belts."

Recalls aren't equal

Some automotive executives say the system needs to be more nuanced because not all recalls are created equal. They say the word itself is misleading because some problems are mundane software patches or other technological glitches that are quick and easy fixes.

"The word 'recall' needs to be recalled," quipped Tesla CEO Elon Musk in a January tweet after NHTSA listed as a recall software changes designed to reduce fire risks during battery recharging.

Dave Zuchowski, CEO of Hyundai North America, is concerned that consumers have become numb to the recalls as their frequency rise and media coverage intensifies. "Recalls used to be a signal of the quality of the vehicle. Now they are a signal of the complexity of the vehicle," he said. "Consumers don't think because of all these recalls, you are building a shoddy car. We've really got to work hard to get more of the people to come in."

Some executives also worry that intense scrutiny of Toyota and now GM will create an overly cautious industry, eventually hitting consumers as the cost of recalls results in higher vehicle prices.

"You're going to see a heightened level of sensitivity. You may see excessive corrective actions," Marchionne said last month. "Today there is a feeling of angst and a feeling of concern about what's going on. I understand it. We just have to manage our way through it."