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GM recalls 1.5 million vehicles, sets aside $300 million for fixes

Justin Hyde
March 17, 2014

The bungled recall of 1.6 million General Motors cars with ignition problems linked to at least 12 deaths has led to congressional hearings, lawsuits and anger from owners and auto safety advocates. Following that recall, GM vowed to change the way it approaches such problems, and today it announced three new recalls covering an additional 1.5 million cars, vans and SUVs, and said it would set aside $300 million this quarter to pay for the repairs.

GM said the new recalls were driven by a review ordered from chief executive Mary Barra, after it was revealed that GM engineers dithered for more than a decade over the ignition problems in Chevy Cobalts and other models. “I asked our team to redouble our efforts on our pending product reviews, bring them forward and resolve them quickly,” Barra said in a statement.  “That is what today’s GM is all about.”

The automaker said there were no reports of injuries related to the three new recalls, which involve:

— About 1.18 million Buick Enclave and GMC Acadia models from the 2008-2013 model years, Chevrolet Traverse from the 2009-2013 model years, and Saturn Outlook from the 2008-2010 model years. GM says if these SUVs have an air bag warning light go on that’s not serviced within a couple of months, the side air bags could fail to deploy in a crash. Dealerships will fix the problem by removing a wiring connector and soldering the wires together.

— Some 63,900 Cadillac XTS full-size sedan from the 2013 and 2014 model years, where a loose plug in a brake booster pump could lead to contamination that creates enough heat to spark a fire. GM said it had two reports from customers and two from vehicles in dealerships about the problem, which will be fixed by reinforcing the plug.

— 303,000 Chevrolet Express and GMC Savana vans from the 2009-2014 model years with gross vehicle weight under 10,000 pounds. The passenger-side plastic cover for the front air bag does not meet federal standards; GM says it will stop selling the vans until it develops a replacement cover.

GM’s steps follow similar moves by Toyota in the wake of its recalls in 2009 over floor mats and unintended acceleration, where it too vowed to move quicker to identify problems. And just like the Toyota cases, those steps did little to slow the march of investigations and lawsuits.

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Congressional committees in both the U.S. House of Representatives and the U.S. Senate have launched probes into why GM and the National Highway Traffic Safety Administration did not act sooner. NHTSA also has its own probe into GM's actions, and the company faces a growing number of lawsuits — although in its 2009 bankruptcy, GM shed all liability for crashes before then.

GM's own timeline of the ignition problems in Cobats, Saturn Ions and several other models — a flaw that allows the cars to accidentally switch off, disabling their air bags — showed engineers had the first indication of a problem in 2001. GM finally recalled the Cobalt in February, but was forced to expand the recall earlier this month after media reports linked the issue to the Chevy HHR and other models.

While the $300 million charge is sizable, it will not make a major dent in GM's balance sheet; the company made $3.8 billion last year, has nearly $28 billion in cash in its automotive business and generates $300 million in sales every 16 hours.