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GM recalls reflect company "living on the brink of disaster," bailout leader says

  • Harry Wilson, who helped lead the White House’s auto task force during the General Motors (GM) and Chrysler bankruptcies, called GM’s recall crisis "emblematic” of deeper cultural problems at the company.
  • Wilson told a Brookings Institute panel that the nearly-decade long delay in recalling 2.6M cars smacks of a penny-wise culture “driven by a company living on the brink of disaster for many years.”
  • While GM is trying to reverse that culture, it still suffers from lack of communication and sharing information, he said - “a problem with GM for decades that [CEO Mary Barra] needs to fix.”
  • Fiat Chrysler (FIATY) CEO Sergio Marchionne told the panel it was unfair that the government helped GM emerge from bankruptcy with lots of cash and little debt while Chrysler had to take new loans, but that Chrysler’s debt burden was a motivating factor that could have helped speed a change in GM's corporate culture - “When you are broke, you change your ways a lot faster.”
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Comments (26)
  • Capt Jack Daniels
    , contributor
    Comments (1409) | Send Message
     
    Fiat needs to stop whining, they got Chrysler on the cheap.
    21 May, 06:56 PM Reply Like
  • chopchop0
    , contributor
    Comments (3526) | Send Message
     
    “When you are broke, you change your ways a lot faster.”

     

    Still is true IMO. F could say the same thing also. GM got lucky.
    22 May, 02:28 AM Reply Like
  • jackooo
    , contributor
    Comments (1525) | Send Message
     
    “When you are broke, you change your ways a lot faster.”
    lol lol Tell Obama. Nothing changed.
    22 May, 05:38 PM Reply Like
  • youngdub774
    , contributor
    Comments (44) | Send Message
     
    This is why govenrment should not interfere with capitalism
    21 May, 06:57 PM Reply Like
  • King Rat
    , contributor
    Comments (724) | Send Message
     
    Oxymoron there. It is no longer capitalism when the government interferes.

     

    Anyway, it is just nationalism.

     

    While the government commandeered ownership of GM, screwing majority bondholders (including teachers' pension funds) in favor of UAW during bankruptcy, the government unfairly prosecuted Toyota. US auto publications declared the brake issue largely driver-avoidable, but that did not stop politicians from waging a campaign of character assassination.
    That Fiat-owned Chrysler got a less preferable bailout than GM is just because Fiat was and is Italian.

     

    Then when the government becomes aware of unquenchable public anger over GM's safety issues, the government sells its stake in GM and immediately feigns anger. Of course it is only to save their own jobs as politicians. It also looks something like insider trading.
    21 May, 08:17 PM Reply Like
  • 1980XLS
    , contributor
    Comments (3333) | Send Message
     
    Rat,

     

    "the government unfairly prosecuted Toyota"

     

    If Toyota thought they were being treated unfairly, they could have went to trial.

     

    They obviously chose not to, rather than have the smoking gun documents that likely existed, exposed to the public.

     

    When GM cars have recalls, GM fixes the cars for customers free of charge
    .

     

    When you get one from Toyota , you have to junk your car for a total loss or risk death driving it.

     

    My 2000 Tacoma was recalled for premature rust. (Google it) Upon inspection, the car was deemed unrepairable and a total loss. Unlike a simple $20 ignition switch parts change (as is with all the nonsense hype over GM)

     

    Toyota offered 1.5X book value to owners of unrepairable trucks.

     

    In my case, since my truck had a salvage title for a completely unrelated issue, they told me tough luck.

     

    Zero, Nada, not a penny for a truck worth $8K at the time.

     

    100% total loss.

     

    I even countered and asked, "Ok, since it does have a salvage title, how about just paying me 1X book value ? That should be fair, right?"

     

    They said no. ZERO, despite me being the original owner of a $70K Toyota Landcruiser, their most expensive vehicle. I told those scumbags I would never buy another Toyota again. For me, my family, or my company.

     

    So, I continued to drive it a few more months, until literally a front wheel fell off when the front control arm separated from the frame.

     

    Could have been killed, fortunately was not.

     

    Had to junk vehicle for total loss.

     

    What's more serious? Your engine stalling while going down the road (the equivalent of running out of fuel, like happens to thousands of people every day without incident) or, having a wheel fall of while driving down the road?

     

    Where was Toyota or the regulators while I was driving that death trap around?
    22 May, 08:33 AM Reply Like
  • 1980XLS
    , contributor
    Comments (3333) | Send Message
     
    Toyota,

     

    More recalls today. Wheels falling off. Spare ones this time. Corrosion, Again.

     

    http://bit.ly/1tptjtI

     

    http://reut.rs/1tptjK0
    22 May, 01:48 PM Reply Like
  • sugarsail1
    , contributor
    Comments (100) | Send Message
     
    The GM issue is way overblown....too many ambulance chasers trying to make a buck
    23 May, 12:37 PM Reply Like
  • chopchop0
    , contributor
    Comments (3526) | Send Message
     
    "The GM issue is way overblown"

     

    Yeah, a defective 50-cent part that's caused possibly hundreds of deaths for more than a decade. Yeah I would say it isn't overblown at all.
    23 May, 01:44 PM Reply Like
  • gatorj
    , contributor
    Comments (28) | Send Message
     
    Where do you get your numbers from? Defective only because the lawyers got into it. Nobody used to carry a quarter pound of junk on a key ring. Used to be a few house keys plus the car key and a key fob. Now, everything but the kitchen sink on the keys. Just watch when someone plunks down the load at a cash register while trying to get their bank card out. Add labor and you have a $80 repair. Still trying to determine exactly how many lives and would love to learn how heavy the load was on the key ring. As noted in other reports, the switches were only designed for a few keys.
    23 May, 10:37 PM Reply Like
  • geekinasuit
    , contributor
    Comments (1189) | Send Message
     
    "... the switches were only designed for a few keys."

     

    Seriously, just a few?
    24 May, 03:43 AM Reply Like
  • gatorj
    , contributor
    Comments (28) | Send Message
     
    Dear Sugarsail1. While you are correct that the ambulance chasers have taken control of this issue, a little integrity can go a long way to instill buyer confidence and support for the product. Lets face it, the so called 50 cents part is more like $80 by the time the dealer warranty claim is paid.
    However, since perception becomes reality, the reality is now that GM is greedy, careless and mean. Why else, as the lawyers are saying on the cable shows, would GM have refused to fix this issue as soon as it learned about it.
    Also, there is perception that the new GM head has given a giant hall pass to those in the leadership chain that allowed this ignoring of the problem to continue for more than a decade.
    For those of us who remember how GM handled quality and safety issues in the mid 80's, its whatever Yogi Berra said it was, all over again.
    26 May, 12:03 AM Reply Like
  • Deja Vu
    , contributor
    Comments (1287) | Send Message
     
    There is one problem and one only at GM. It is called the UAW. The UAW makes it so expensive to produce cars, that GM is forced to cut costs everywhere except the fat wages and benefits they pay to the UAW. That is why GM is, was and will be a forever a investment that will sooner or later tank. Both equity and bonds of GM are losers. Bonds because our dear government will wipe out senior claims and equity because it will become worthless.
    21 May, 06:58 PM Reply Like
  • geekinasuit
    , contributor
    Comments (1189) | Send Message
     
    A dysfunctional union is a symptom of a disease, not the cause.
    21 May, 07:16 PM Reply Like
  • grange402
    , contributor
    Comments (124) | Send Message
     
    They are getting the recalls out of the way. Fixing all the minor problems they can find so they can move on and the negative scrutiny will be focussed elsewhere. This is a great stock to buy at this price, I think. If it is good enough for the Wizard of Omaha, it is good enough for me.
    21 May, 08:17 PM Reply Like
  • capitolp
    , contributor
    Comments (678) | Send Message
     
    Didn't like the GM car I owned, didn't like the fact that some of my money as a taxpayer was lost on GM, and all the wasted money on the past and future Gov't dog and pony shows over GM. The best thing we could of done was give the company and half of Detroit to China, a brand new ghost city and something from China we wouldn't have to import, Win, Win.
    21 May, 08:23 PM Reply Like
  • funfun
    , contributor
    Comments (2664) | Send Message
     
    "…deeper cultural problems…"

     

    Yes, a culture of CHEAT-to-COMPETE, using any dirty trick or violating any law or rule to defraud the buyer and the investor. Save face at all costs, and focus intensely on fabricating a public relations IMAGE. Cover up and conceal. Chisel and chink away at any decency left.

     

    Ultimately such a culture destroys market value. Recall Worldcom? Enron? Lehman Brothers? Washington Mutual? Or the now struggling Bank of America?

     

    …funfun..
    21 May, 11:31 PM Reply Like
  • gatorj
    , contributor
    Comments (28) | Send Message
     
    Does anyone remember the following in GM history? The launch of the "H" body cars with the 3.8 fuel injected engine that kept stalling? The transmissions that kept failing with enough frequency that the company allowed dealers to keep extras on hand(without charge) so that cars could be put back on the road sooner. And let us not forget the windows that suddenly dropped into the door panels due to a problem with the clips that held them in place. And the drivers side door arm rest that would come off if you pulled the door closed too hard.(screws were too short)
    That faulty 3.8 fuel injected engine would plague GM until the launch of an amazingly well made and long lasting 3800 Series II engine. However by the time the transmission issues and the engine issues were resolved, the damage to GM was done. The "H" body launch began with the l986 model and it was not until the l988 model that the problems were fixed. Recall that during that same time, Acura was launched and Honda and Toyota were growing. GM knew about these issues and while it took time for the big fixes, lots of damage was done to the image of the brand by the small problems. The factory could have held up release to replace the fault clips in the windows and the door handles that fell off because the screws were too short. Same mentality then as with the ignition switches now.
    22 May, 02:08 AM Reply Like
  • Capt Jack Daniels
    , contributor
    Comments (1409) | Send Message
     
    GM knew it was done and could have done the right thing during it's reorganization.
    Someone at GM had to know, but they just made a bad business choice.

     

    It's akin to seeing money fall out of some customers wallet and instead of picking it up and telling the person, GM instead simply and several times choose to stand over that money and pocket it.

     

    Car companies are to stocks what the airline companies were to stocks ten to twenty years ago. Bad investment, often leading to shareholder bankruptcies, while never leading to the actual companies going ever out of business.

     

    CHurn as usual.
    22 May, 12:07 AM Reply Like
  • chopchop0
    , contributor
    Comments (3526) | Send Message
     
    Yup. It's amusing to see the number of "pundits" saying GM has been "cheap" the last several months. It has done nothing since its IPO a few years ago.
    22 May, 02:30 AM Reply Like
  • geekinasuit
    , contributor
    Comments (1189) | Send Message
     
    Right there is one of the big differences between GM and a company like Fiat. Fiat at least appears to be fighting hard for a future. GM I'm not so sure, it seems to have done nothing while living off of government tax grab handouts.
    22 May, 02:52 AM Reply Like
  • sugarsail1
    , contributor
    Comments (100) | Send Message
     
    American car companies are what happen when you let accountants, sales and marketing guys call the shots instead of engineers and customer demand. GM's troubles are common to all of the big three, it just hasn't been exposed yet.
    22 May, 01:00 AM Reply Like
  • wiseone123
    , contributor
    Comments (191) | Send Message
     
    The saddest part of the GM story is that the buyers just keep on coming. Heavy incentives brings them in the door, and a large minority if not a majority of such customers will not even know of the GM recall problems. Those that do know are being conditioned to the scenario that recalls are now an ACCEPTED way of life in the auto manufacturing business as no one at these companies is ever held accountable. Cut a few thousand bucks off the sticker and I'm sold. The dealer warranty will cover me at least for the first three years or 36,000 miles. It suggests that leasing rather than retail financing of automobiles may in the long run, become the predominate means of acquiring an automobile.
    22 May, 04:13 AM Reply Like
  • Capt Jack Daniels
    , contributor
    Comments (1409) | Send Message
     
    If Mary Barra was really a great CEO she would have done something like say extend the warranties on GM vehicles past the typical standard 3 years on most US GM vehicles. Instead they are simply looking to dose any issues that they have too long ignored.

     

    The only ones getting rich off Gm are the current & former consultants, attorneys, top managers, and the UAW. Shareholders get what ever is left over from their gross negligence and incompetence.

     

    I was really hoping for a better Gm so much that I actually got some GM at the IPO, I am so relieved I sold it last year well before all this typical incompetence came to the fore front.

     

    Mary isn't new to the game and she isn't an up and comer, she's just an old timer who got the chance and is blowing it.

     

    Funny how GM fought so hard wanting to avoid bankruptcy because of a perceived brand damage to any auto company that had to reorganize and as great as say having the FED Government in as an unintended investor, it just shows you how speak no evil, see no evil, and hear no evil can really hide things, but eventually the smell gives things away.

     

    Right now GM smells rather bad.

     

    So what are they doing to fix it ? paying for better slogans? more expensive consultants and lawyers?

     

    How about actually talking to customers who have bought cars from GM and spending a little money to keep them.

     

    How about not skimping on services and part replacements.

     

    Do you really want your older GM vehicles to rust away and be driven with known issues ( like the brakes not working at slow speeds? ) or would you rather take care of them so they can be a testament and advertisement to the greatness of the product. I remember a time when I would feel proud about GM, sadly that time is a long 30+ years ago.

     

    I'd be calling everyone who has an older GM vehicle and thanking them and apologizing for being so short sighted.

     

    In fact the top management should be on the phones apologizing to shareholders who they screwed over with the standard same old operating procedures.

     

    I'd hate to be the guy who ran GM into the ground and went from number 1 to what now ? number 3 or 4?
    22 May, 08:28 AM Reply Like
  • funfun
    , contributor
    Comments (2664) | Send Message
     
    Captain, you have penned another insightful overview of this troubled company in decline.

     

    "So what are they doing to fix it ?", you ask.

     

    Well, for starters, they re-hired an old GM veteran to be Senior Vice President of GM Global Communications.

     

    Read that Chief of Disinformation, Misinformation, & No Information.

     

    …funfun..
    22 May, 09:26 AM Reply Like
  • Capt Jack Daniels
    , contributor
    Comments (1409) | Send Message
     
    Fun fun, they need to rehire like a thousand more of those jokers and the others who have played a part or several, maybe give them some flashy new title of guy who is going to be dragged across the coals and be granted an enormously large severance package all at shareholder expense ~ start them off at a junior vice president spot.

     

    The witch isn't even on trial.

     

    Senior Vp of communications... needs to spend some time on the phones apologizing to the customers and not coming up with bogus new slogans.
    22 May, 10:04 AM Reply Like
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