I have a confession to make. I know a former airline captain. An excellent pilot, actually. But who had (and still has) a serious drug problem. And I'm pretty sure the airline knew (he's not flying now, and it wasn't an American airline, or even a major global carrier.) And I know I'll never, ever fly that airline again, not because one of their captains had a serious problem, but because there's no way the company didn't know, and because they did nothing about it.
General Motors' situation right now around the recall of 1.6 million cars isn't all that different in some respects. Everyone gets recalls. It happens all the time, every year. But stuff happens and automakers who take action right away avoid the worst of it. General Motors knew for years about the faulty ignition switches in cars like 2003 to 2007 model-year Chevy Cobalts, Saturn Ions, and Pontiac G5's: Under certain conditions, the ignition could jiggle to the off position, which would also disconnect the electrical supply to the airbags, preventing their deployment. General Motors last year determined that the problem had caused a dozen fatalities.
Lawsuits will certainly come in droves, as will subpoenas to employees present and past. But the question, as one observer told me, may not be "who knew," but "who didn't." It's impossible to believe that the National Highway Traffic Safety Administration (NHTSA), the government, the Justice Department, GM executives, the government's bailout czar Steve Rattner, and others on top didn't know about this problem. It's not like it wasn't in the press, or that there was some kind of disconnect between the dealers and the company.
As Jeff Green reported today in Bloomberg, 10 years ago journalists and the automaker's own engineers, dealers, PR folks, and execs were hip to the defect. In 2005, he notes, the New York Times reported that dealers were telling owners not to use key rings with heavy things on them, as they might be apt to turn the key to the off position. Consequent crashes and fatalities notwithstanding, this is a problem of trust and confidence for a consumer. Boomers had soured on the domestic automakers because of quality issues anyway. But now? What's the next generation going to say? "Maybe dad was right."
I know something about the business, and I know a lot of the current models at Chevrolet and the automaker's other brands are strong. But even I won't be able to prevent this thought from sneaking into my head at the dealership: "Hm, it looks like they fixed the product, but did they fix the corporate culture?" When you buy a car, you buy the company. As the insider I spoke with put it, "If people think you can't make an ignition switch that works, and that you did nothing about the problem when you discovered it, how are you going to convince people to buy an autonomous car when that technology evolves? Am I going to buy one of your driverless cars? Really? What we are talking about is trust and confidence. 'And when did we get so stupid, we couldn't make an ignition switch. Who wired this car?'"
Oh, and, by the way, where was NHTSA and the government "owners" of GM around all of this, during the bailout? If the government is going to take the automaker to task, does the government get immunity? Again, who gets to be the fall guy? "That place is a beehive like any other place. It's a big, small place. You have risk management reporting to legal and to the CFO who is involved in administration, human resources and the whole engineering community and product liability. And sales and marketing and CRM and owner retention and relationships with dealers and service department, reporting into one guy," said the insider I spoke to.
The automaker is giving owners of the recalled cars free loaners and $500 vouchers for their next purchase. I don't know. If the president of the aforementioned airline came to my door and told me the captain I know is just an anomaly and that as a thank you for remaining a loyal customer he'll give me $500 off my next ticket, I'd say thanks and then go with another carrier. Just to be safe.