• Sign in to follow this  
    Followers 0

    GM Expands Ignition Switch Recall Amid A Climbing Death Toll


    • GM expands their already big recall concerning faulty ignition switches


    Two weeks ago, General Motors announced a massive recall that involves 778,562 Chevrolet Cobalts built between 2005 to 2007 and Pontiac G5s built in 2007 because of a faulty ignition switch that slip out of the run position if jostled or if any weight was applied to the key in the cylinder. Now this problem has caused 22 accidents and claimed the lives of six people since the air bags didn't deploy since the key was turned away from the run position. Now a GM spokesman pointed out at the time that the lack of air bags weren't the only factor in these fatalities; high speed, alcohol, not wearing a seat belt, and going off the road played a role in the six different fatalities.

    At that time, GM told owners to remove non-essential items from their key rings and get to their nearest dealer for a free replacement of the switch.

    Well today, GM has expanded the recall to an additional 588,000 vehicles bringing the total amount to over 1.6 million vehicles. The vehicles announced in this additional recall are,

    • 2003-07 Saturn Ion
    • 2006-07 Chevrolet HHR
    • 2006-07 Pontiac Solstice and Saturn Sky

    Along with the addition of the vehicles to the recall, the number of crashes and fatalities has increased to 31 and 13 respectively.

    In a statement, General Motors says they have begun the process of letting owners owners of the affected vehicles know. But it will go further by reaching out to social media and its customer care centers.

    But this may be only the beginning of problems for GM. Last week USA Today got their hands on documents in a court case concerning the death of pediatric nurse Brooke Melton. In 2010, she got into a accident with her 2005 Cobalt, killing her. A dump of the vehicle's black box showed that before the crash, the key was not in the run position, thus turning off the vehicle and causing the vehicle to lose control. During the trial, a GM engineer said the problem appeared when testing the Cobalt before went on sale.

    This was confirmed by documents filed by GM to safety regulators yesterday. Engineers were able to replicate the problem and an inquiry was opened. However, no action was taken after lead time, cost and effectiveness of potential solutions were taken into account.

    The paperwork goes on to say that in 2005, GM started getting reports that Cobalts were losing power when a driver inadvertently hit the key or the steering column. The company issued a service bulletin telling dealers that the likely cause came down to a heavy or large key ring. Dealers were told to notify customers to remove non-essential items from the key ring. During the 2007 model year, GM transitioned to a new ignition switch.

    But it was a few years ago that GM started getting reports of accidents in Cobalts where the airbag didn't deploy. It was discovered that the key was turning into the accessory position.

    With this, GM has opened itself up to the potential of lawsuits.

    "The chronology shows that the process employed to examine this phenomenon was not as robust as it should have been. Today's GM is committed to doing business differently and better. We will take an unflinching look at what happened and apply lessons learned here to improve going forward," said GM North America President Alan Batey.

    Source: Automotive News (Subscription Required), USA Today, (2), General Motors

    Press Release and GM's Filing is on Page 2


    GM Expands Ignition Switch Recall

    • Chevrolet HHR, Pontiac Solstice, and Saturn Ion and Sky included
    • Company Launches Process Review

    DETROIT – General Motors is expanding the recall of certain 2003-2007 model year vehicles to correct a condition with the ignition switch that may allow the key to unintentionally move or switch to the "accessory" or "off" position, turning off the engine and most of the electrical components on the vehicle.

    In addition to 2005-2007 Chevrolet Cobalts and Pontiac G5 and Pontiac Pursuit sold in Canada only, GM is separately recalling 2003-2007 Saturn Ions, 2006-2007 Chevrolet HHRs, and 2006-2007 Pontiac Solstice and Saturn Sky models. The affected U.S. vehicle population, including those vehicles recalled Feb. 13, totals 1,367,146.

    This expanded vehicle population raises the number of reported incidents involving frontal crashes, in which the recall condition may have caused or contributed to the non-deployment of the frontal airbags, to 31 involving 13 front-seat fatalities.

    As part of the recall, GM is taking steps to address customer concerns and working with its suppliers to increase parts production and accelerate availability.

    GM will notify all affected customers that in addition to recalling their vehicles and performing repairs at no charge to them, GM and its dealers will work with customers on an individual, case-by-case basis to minimize inconvenience associated with the recall.

    "Ensuring our customers' safety is our first order of business," said GM North America President Alan Batey. "We are deeply sorry and we are working to address this issue as quickly as we can."

    Going beyond required written notification, GM, through its customer care centers and social media teams, is using customer records and communications channels to notify affected customers of the recall and additional actions the company is willing to take to relieve their concerns and minimize inconvenience.

    GM is recalling these vehicles because the ignition switch torque performance may not meet GM specifications. If the torque performance is not to specification, and the key ring is carrying added weight or the vehicle goes off road or experiences some other jarring event, the ignition switch may inadvertently be moved out of the "run" position.

    The timing of the key movement out of the "run" position, relative to the activation of the sensing algorithm of the crash event, may result in the airbags not deploying, increasing the potential for occupant injury in certain kinds of crashes.

    Dealers will replace the ignition switch to prevent the unintentional or inadvertent key movement. Until this correction is performed, customers should use only the ignition key with nothing else on the key ring. As always, customers should drive responsibly and use their safety belts.

    On Monday, the company submitted to the National Highway Traffic Safety Administration a detailed chronology associated with its initial recall of the ignition switch torque performance condition in Chevrolet Cobalts and Pontiac G5s and Pursuits. The chronology outlines events that happened during the time that elapsed between receiving the first field reports and issuing a recall.

    "The chronology shows that the process employed to examine this phenomenon was not as robust as it should have been," said Batey. "Today's GM is committed to doing business differently and better. We will take an unflinching look at what happened and apply lessons learned here to improve going forward."

    0


    Sign in to follow this  
    Followers 0


    User Feedback


    What is sad is they new about in testing phase, so that was probably 2003-2004 and they for sure knew of the problem in 2005, yet did nothing. This is why they have a bad reputation and people don't trust them. How about getting it right the first time, rather than doing what is cheapest or "good enough." GM always had these press releases that say we are committing to doing better or being world class, and the new GM is different from the old, but they have been saying that for 30 years. Actions would speak louder than words.

    0

    Share this comment


    Link to comment
    Share on other sites

    One PreGM Bankruptcy and the BEAN counters were in control, so the cost of lawsuits outweighed building the product right. Clear enough, GM is aggressively working to fix this.

    I feel for the people who died and the families who lost loved ones. I think GM would be wise to let people know if all the deaths were only due to this or if human error also truly played a part as they imply in the comment about alcohol and other issues.

    End game, GM is still way better than they used to be. Can they improve YES THEY CAN, I believe this is a good test case for them to show it by aggressively going after repairing this.

    I would still take one of these GM auto's over anything German or Asian built. Simple fix, replace the ignition switch.

    0

    Share this comment


    Link to comment
    Share on other sites

    This same thing happened in my 1997 Cavalier causing the steering wheel to lock in a turn but luckily I was able to get the car into neutral and get the car restarted before I crashed. I have a feeling that this recall will get bigger over time.

    I resolved the issue by switching to my spare key which was still crisp and sharp unlike the worn key that I was using.

    0

    Share this comment


    Link to comment
    Share on other sites

    I hate to sound insensitive, but I think there is a major driver problem when the driver can't cope with a stall, except to crash.

    There's a stall, which is easy to manage...

    ... and then there's an unexpected steering wheel lock while driving. At that point, stalling is the least of one's concerns.

    0

    Share this comment


    Link to comment
    Share on other sites

    I hate to sound insensitive, but I think there is a major driver problem when the driver can't cope with a stall, except to crash.

    There's a stall, which is easy to manage...

    ... and then there's an unexpected steering wheel lock while driving. At that point, stalling is the least of one's concerns.

    Show me a source that claims the steering wheel locked. I haven't seen it. This is about the key either being loose and the car "falling out" of run or the driver bumping the key and knocking the key out of 'run'... but in either case, turning the key from run to acc to lock is not easy to do by bumping it. All the articles I've seen only mention the car stalling, not locking the steering... and then the airbag not functioning on impact.

    Since I am all too familiar with a '98 Sunfire (and a bit less familiar with the recently acquired '97 CheapHoe (Tahoe), which has the same exact key and ignition), it would take quite a bit a bumping to get the ignition to fall out of run... and consider that the '97's ignition is loose enough I can start it with my mailbox key. Playing with these, it really would take an unusual operation to accidentally lock the steering. Of course, these are not the ignition in question. I am not familiar with the Cobalt/SSR/Kappa ignitions and keys.

    In any case, if I jerked my ignition key and the car stalled and locked the steering, I would be immediately turning the key to see if it unlocked it.

    -1

    Share this comment


    Link to comment
    Share on other sites

    Too much weight on the key ring has been named as one cause. These people who have fifty pounds of unnecessary stuff attached to their car keys always induce an eye roll. The ignition switches on Cobalts, etc., that are involved are a unique design.

    The fact that it has come out that GM discovered the problem long ago and came up with an ineffective fix is damning, though.

    1

    Share this comment


    Link to comment
    Share on other sites

    GM will have to eat crow, do normal damage control and pay out money. Then hopefully they will not listen to a bunch of bean counters and lawyers who only have their own wealth in mind and actually listen to the engineers who design and create these auto's so that the next problem like this comes up and they actually fix the issue never allowing it to get to the field.

    1

    Share this comment


    Link to comment
    Share on other sites

    I hate to sound insensitive, but I think there is a major driver problem when the driver can't cope with a stall, except to crash.

    There's a stall, which is easy to manage...

    ... and then there's an unexpected steering wheel lock while driving. At that point, stalling is the least of one's concerns.

    Show me a source that claims the steering wheel locked. I haven't seen it. This is about the key either being loose and the car "falling out" of run or the driver bumping the key and knocking the key out of 'run'... but in either case, turning the key from run to acc to lock is not easy to do by bumping it. All the articles I've seen only mention the car stalling, not locking the steering... and then the airbag not functioning on impact. <snip>

    If the ignition switch moves out of "run" in any car -- which is exactly what's happening with these vehicles -- the steering wheel locks subsequently. You don't need a news report for that.

    0

    Share this comment


    Link to comment
    Share on other sites

    If the ignition switch moves out of "run" in any car -- which is exactly what's happening with these vehicles -- the steering wheel locks subsequently. You don't need a news report for that.

    Simply wrong.

    On modern cars, there are four positions... Lock, Accessory, Run and Start, in that order. (See page 2-16 and 2-17 in the 2005 Cobalt Owners Manual (http://www.vadengmpp.com/owners-manual/chevrolet/2005-Chevrolet-Cobalt.pdf). The steering only locks on Lock. Falling out of Run would place the ignition either in Accessory or (depending on the switch contacts) something of a cross between Accessory and Run... If the steering locks in Accessory, you need to have your car ignition fixed, as its not working to GM specs.

    Even on older cars, with an ignition order of Accessory, Lock, Run and Start, there is enough of a gap between Lock and Run that you can remove the car from Run and place it in the gap between Lock and Run, where its off, but the steering it not locked. I know this for a fact, as I've shut off and restarted many of my cars countless times without locking the steering while the car was rolling along at speed.

    0

    Share this comment


    Link to comment
    Share on other sites

    OK, I shall admit my mistake and defer to your experience on this one. :bowdown:

    I had my Bonneville stall out countless times -- even on freeways -- when the MAF sensor was dying out. So many times that, in fact, I became a pro at rolling starts myself. Not fun, but hey. The thing was, I could actually feel the car stall out each time it happened, and the ignition was still in On so I had full power otherwise.

    It's a bit different when the car turns its own key to Acc and you lose your power steering and brakes (by GM's own account, this happens). It may not be an actual steering lock, but it sure might feel like it when you don't see it coming...

    0

    Share this comment


    Link to comment
    Share on other sites

    The squishy folks of today that have no muscles at all probably think it locks up when it slips out of run due to the increased resistance. Just think how bad it would be if it was truly manual steering of the 70's or older auto's! Men and Woman of those days had to have some arm muscles to drive a car. :P

    0

    Share this comment


    Link to comment
    Share on other sites

    I agree that loosing power is disconcerting, but it is like any other hazard of driving... you have to be prepared for anything... be it a sudden stall, a huge pothole, or a car darting out of nowhere into your lane. Steering/brakes not working normally? You better adjust your plans RIGHT NOW. One can argue fault all they would like, but it does not bring one back from the dead... the only person on the road that is looking out for your life is yourself.

    Dfelt, I used to drive my '68 Catalina with no assist, as the pitman arm seal leaked like a sieve, so I removed the pump. Nothing like regularly parallel parking a power steering car with no power steering to build the muscles. Ugh.

    Normal manual steering cars fixed the issue by have an insane turning ratio and a huge wheel to give you better leverage... so parallel parking involved turning the wheel 50 times to the right followed by 100 times to the left and then 50 times to the left again.

    0

    Share this comment


    Link to comment
    Share on other sites

    I agree SAmadei, today many drivers are paying more attention to their smart phone than to their driving.

    Loss of life is always sad and regretful, but I wonder how many of the 6 deaths involved the driver not really paying attention to their driving due to being distracted with other things and when the slip happened they just let it go. Each and every human behind the wheel has an obligation to their driving and the people around them.

    0

    Share this comment


    Link to comment
    Share on other sites

    One PreGM Bankruptcy and the BEAN counters were in control, so the cost of lawsuits outweighed building the product right. Clear enough, GM is aggressively working to fix this.

    I feel for the people who died and the families who lost loved ones. I think GM would be wise to let people know if all the deaths were only due to this or if human error also truly played a part as they imply in the comment about alcohol and other issues.

    End game, GM is still way better than they used to be. Can they improve YES THEY CAN, I believe this is a good test case for them to show it by aggressively going after repairing this.

    I would still take one of these GM auto's over anything German or Asian built. Simple fix, replace the ignition switch.

    Question is now two fold...

    1) how are they going to handle this? Prove to me GM that this is not just talk.....I'm got a front row now with my Balt...

    2) Just how much damage is this going cause? Hate to see them have to give away Cruzes because of the s**tbalts.....

    0

    Share this comment


    Link to comment
    Share on other sites

    Loss of life is always sad and regretful, but I wonder how many of the 6 deaths involved the driver not really paying attention to their driving due to being

    Not 6 deaths... 13.

    0

    Share this comment


    Link to comment
    Share on other sites


    Your content will need to be approved by a moderator

    Guest
    You are commenting as a guest. If you have an account, please sign in.
    Add a comment...

    ×   You have pasted content with formatting.   Remove formatting

      Only 75 emoticons maximum are allowed.

    ×   Your link has been automatically embedded.   Display as a link instead

    ×   Your previous content has been restored.   Clear editor




  • Popular Stories

  • Today's Birthdays

    1. MisterMe
      MisterMe
      (64 years old)
  • Similar Content

    • By dfelt
      G. David Felt - Staff Writer Alternative Energy - www.cheersandgears.com
      Tesla Officially in Trouble, Business Insider Says!

      To quote Business Insider final comments on Tesla and the Chevy Bolt:
      "Clearly, Tesla would be in less trouble if the Chevy Bolt were a bad car. But it isn't. Teslas have always blown me away. The Bolt blew me away for different reasons. I just hope Tesla is prepared to take this into account." 
      Matthew is a Business Insider senior correspondent who covers transportation and as a fan of Tesla was excited to check out a Chevy BOLT as comparison to the Tesla. On a recent trip to california he took time to visit the closet Chevrolet Dealer to his hotel and this is what he found.
      He states that to borrow Barkley's line, "Tesla is in trouble." You have one of the world's biggest auto companies that is known for killing the electric auto stepping off the sidelines and actually committing considerable resources to building a long range EV where it can afford to lose money on it long term till the market changes. Tesla has 400,000 plus pre-orders, but is burning through cash by the billions and while the launch of the Tesla 3 is near and Tesla still has Sexy much like Apple to an iPhone. Tesla does not have the depth of customer auto experience to pull from and as the author points out, Tesla balance sheet is precarious as it is based on raising funds on a growth story. The author goes onto say that no one will cross shop a Tesla S or X with the Chevy BOLT. They will due to limited options cross shop the Tesla 3 to the Bolt.
      To pull some interesting statements from the story, the author had the following to say:
      "I found it more fun to drive than both the Tesla Model S and the Model X, but not the original Roadster, a much smaller vehicle."
      "The Bolt is plenty fast for most people."
      "GM isn't going to overwhelm Tesla with Bolt sales. I actually think the Model 3 will greatly outsell the Bolt once Tesla's car arrives. However, it's also possible that if the Model 3 is delayed or is slow to ramp up, Chevy will be preparing a mid-cycle refresh of the Bolt before Model 3 sales start to achieve some major momentum. In other words, GM will always be ahead, and the company — barring another massive financial meltdown — will never stop putting the Bolt up against the Model 3."
      BI covered the BOLT in follow stories with the next one being more of an official review that starts off with covering the auto with the following statement: "A platform, not business as usual!" 
      From ride-hailing to ride-sharing, self driving Chevy has delivered an auto for the future that gives GM options on how they build and expand their EV lineup. BI took delivery of their white Premier BOLT just before the blizzard that hit NY. Clearly a compact-crossover-hatchback look, design is what the magazine employees felt it was and is. Surprising the BI reviewers was the amount of cargo the auto can hold and how well it handled 4 people and grocery getting. BI states that GM has told them the next addition to the BOLT lineup will be a larger auto that can accommodate 5 or more people. An exceptionally well executed minimalist design that comes with an interior that feels more premium in comparison to auto's this size in the past from GM that felt clearly parts bin cheap. The review goes on to talk about how setting the front seat for a 6'4" tall driver and getting in the back with room ahead of the knees for the same size person is a nice welcome addition to such a compact auto. Heated steering wheel was welcomed by all. Apple CarPlay and Android Auto kept everyone happily connected to their phone while driving.
      The final statement to quote from the review is as follows:
      "We were impressed with the Bolt, as a car, as an electric car, and as a mobility concept. In many ways, it is GM's post-bankruptcy masterpiece, a real feather in the cap of CEO Mary Barra and her executive team, who took what the company had achieved with its ill-fated EV-1 back in the 1990s and turned it up to 11. 
      I also flat-out loved driving it. I blasted in and out of New York City twice, rocketed around the streets of Gotham, darting through traffic, and cruised along the highways of New Jersey. I also enjoyed just driving it around the quiet streets of the suburb where I live.
      The steering is quick and responsive, and the handling is sharp enough to provide the confidence you need when surfing that sweet EV torque.
      The single-pedal mode is also very cool — I dug not using the brakes at all for extended excursions in my town. After a bit of practice, you get into a kind of Zen state with it. 
      Not a single person asked me about the car, and that can be chalked up to the ho-hum design. But I didn't care. I was lovin' it. Plain and simple, the Bolt is fun."
      Here is where we have overlap between story #2 and Story #3 which covers the 7 Killer Features:
      Dual Screens- 10.2" touch screen infotainment center & an 8" drivers console display which are totally customizable. Auto's wireless charging console. BOLT App allowing you to be connected to your auto at all times. Five cameras: front, rear, side mirrors and their 360 camera. 9hr full charge time from a 240 volt charger. 25 miles per hour, faster with Level 3 DC charging. Lane Keep assist feature. Modern Seat design allowing for maximum space inside. Over all these writeups show that GM has delivered a superior auto to the Prius, Leaf, 500e, etc. The future will be bright for the BOLT as GM move the platform forward.

      BI Story #1
      BI Story #2
      BI Story #3
    • By William Maley
      Last week saw the PSA Group (parent company of Citroen and Peugeot) purchasing Opel and Vauxhall from General Motors for $2.3 billion. This move would make the PSA Group the second-largest automaker in Europe. We already know some of the plans that PSA Group has for their new brands such as setting operating profit targets of 2 percent in 2020 (jumps to 6 percent by 2026) and the next-generation Opel/Vauxhall Corsa being the first new product developed with PSA. But as we alluded to in the original news story, there are a lot of questions that remain unanswered such as possible job cuts or what happens to Buick and Holden as they share products with Opel. I have been doing a bit of thinking on these and some other questions. The end result is this piece.
      1: Will there be job cuts and plant closures?
      In 2016, PSA Group employed 172,000 people worldwide. With the acquisition of Opel and Vauxhall, they will be adding close to 42,000 workers (the majority of those from Opel). The number of plants will also increase to 28 due to this purchase. Sooner or later, PSA Group is going have to make cuts. During the press conference announcing the deal, PSA Group CEO Carlos Tavares said the company “would honor existing labor agreements and closing plants is a “simplistic” solution.” That may be true for now, but this might change within the coming years. Some analysts believe PSA Group will close two to three plants within five years.
      The most likely place where the closures and layoffs could take place is in Great Britain. The reason as we talked about in a story back in February deals with the decision made by British citizens last year with leaving the European Union.
      “By leaving, the country would lose access to the EU Single Market which guarantees unconstrained trade across the member states. It would mean various countries would be leveraging tariffs on British-made goods, making production in the country less competitive.”
      Former British member of parliament and business secretary Sir Vincent Cable outlined how bad this decision looks for Vauxhall in a recent interview on BBC Radio 4.
      There could be a way that the British Government could at least stall the possible closures. Back in October, the British Government worked out a secret deal with Nissan to keep them investing in British car production at their plant in Sunderland. This deal caused an uproar as the details were kept as many believed the British Government would be handing over money to keep Nissan happy. But sources told British newspaper The Independent back in January that the deal had no mention of money.
      It could be that the British Government could do something similar for PSA Group to keep jobs, but it is too early to say if this will happen or not.
      2: Will this affect PSA’s plans of entering the U.S.?
      Probably not. Let’s remember that PSA Group is working through a ten-year plan that may or may not see the return of the Citroen and Peugeot, along with the introduction of DS to the country. Already, the first part of this plan is gearing up for the launch of a car sharing service next month. There is also extensive research going on into the U.S. marketplace. 
      But could there be a possibility of Opel or Vauxhall vehicles being sold here? It would not be surprising if there isn’t talk about this at PSA Group’s HQ. But there is a slight complication to this idea. As part of the sale, PSA Group cannot sell any Opel vehicles developed by GM anywhere in various markets outside of Europe (China and U.S. for example) until they transition to PSA platforms. That means a number of models such as the Astra, Insignia, and Mokka are out of the question for the time being. If Opel was chosen to be one of the brands PSA would sell in the U.S., they might not have a full line of vehicles to sell due to this clause.
      3: What does the future hold for Buick and Holden?
      If there are some losers from the sale of Opel, it has to Buick and Holden. Buick has found some success with Opel products as the Encore (rebadged Mokka) has become one the best-selling models for the brand. Holden is getting a shot in the arm as the Astra will hopefully help their fortunes in the compact space, and the new Commodore (rebadged Insignia) has a tough task ahead of it with living up to an iconic name. For the time being, Opel will continue supplying models to both brands. It is what happens in the future that many are concerned about.
      During the Geneva Motor Show, GM President Dan Ammann said something very interest to Australian journalists about the future of Holden’s products.
      This makes sense as the Astra was only launched and the Commodore is getting ready to go on sale. But I wouldn’t be surprised if talks begin very soon about this very topic. The same talks are likely to begin at Buick soon where they face the same issue for the Regal and Encore. Our hunch is Buick might have the easier time of two. The Encore would continue on since it shares the same platform as the Chevrolet Trax. As for the Regal, it could leave Buick’s lineup once the next-generation model runs its course.
      4: Does GM lose anything with this deal?
      There has been a lot of talk about how much money will be freed up from the sale of Opel/Vauxhall for GM, along with making a bit more profit. But it comes at a cost that could hurt GM down the road. The recent crop of compact and midsize sedans from GM owe a lot to Opel’s engineering knowledge. Vehicles that excel in driving dynamics and fuel economy are worth their weight in gold when it comes to the European marketplace. As we know, one part of why GM went into bankruptcy was the lack of competitive small and midsize cars that got good fuel economy. Opel would prove to be GM’s savior with this key knowledge.
      Right now, compacts and midsize sedans aren’t selling as consumers are directing their attention to crossovers and SUVs. This is due in part to lower gas prices. But sooner or later, the price of gas will go back up and cause many to go back to smaller vehicles. With talk about GM scaling back on their small and midsize car lineup, this decision could have consequences down the road. Plus with Opel out of the picture, GM doesn’t have someone it can rely on to get these models back to the forefront. We can hope GM’s North American office has learned some stuff when working with their European counterparts.
    • By William Maley
      Last week saw the PSA Group (parent company of Citroen and Peugeot) purchasing Opel and Vauxhall from General Motors for $2.3 billion. This move would make the PSA Group the second-largest automaker in Europe. We already know some of the plans that PSA Group has for their new brands such as setting operating profit targets of 2 percent in 2020 (jumps to 6 percent by 2026) and the next-generation Opel/Vauxhall Corsa being the first new product developed with PSA. But as we alluded to in the original news story, there are a lot of questions that remain unanswered such as possible job cuts or what happens to Buick and Holden as they share products with Opel. I have been doing a bit of thinking on these and some other questions. The end result is this piece.
      1: Will there be job cuts and plant closures?
      In 2016, PSA Group employed 172,000 people worldwide. With the acquisition of Opel and Vauxhall, they will be adding close to 42,000 workers (the majority of those from Opel). The number of plants will also increase to 28 due to this purchase. Sooner or later, PSA Group is going have to make cuts. During the press conference announcing the deal, PSA Group CEO Carlos Tavares said the company “would honor existing labor agreements and closing plants is a “simplistic” solution.” That may be true for now, but this might change within the coming years. Some analysts believe PSA Group will close two to three plants within five years.
      The most likely place where the closures and layoffs could take place is in Great Britain. The reason as we talked about in a story back in February deals with the decision made by British citizens last year with leaving the European Union.
      “By leaving, the country would lose access to the EU Single Market which guarantees unconstrained trade across the member states. It would mean various countries would be leveraging tariffs on British-made goods, making production in the country less competitive.”
      Former British member of parliament and business secretary Sir Vincent Cable outlined how bad this decision looks for Vauxhall in a recent interview on BBC Radio 4.
      There could be a way that the British Government could at least stall the possible closures. Back in October, the British Government worked out a secret deal with Nissan to keep them investing in British car production at their plant in Sunderland. This deal caused an uproar as the details were kept as many believed the British Government would be handing over money to keep Nissan happy. But sources told British newspaper The Independent back in January that the deal had no mention of money.
      It could be that the British Government could do something similar for PSA Group to keep jobs, but it is too early to say if this will happen or not.
      2: Will this affect PSA’s plans of entering the U.S.?
      Probably not. Let’s remember that PSA Group is working through a ten-year plan that may or may not see the return of the Citroen and Peugeot, along with the introduction of DS to the country. Already, the first part of this plan is gearing up for the launch of a car sharing service next month. There is also extensive research going on into the U.S. marketplace. 
      But could there be a possibility of Opel or Vauxhall vehicles being sold here? It would not be surprising if there isn’t talk about this at PSA Group’s HQ. But there is a slight complication to this idea. As part of the sale, PSA Group cannot sell any Opel vehicles developed by GM anywhere in various markets outside of Europe (China and U.S. for example) until they transition to PSA platforms. That means a number of models such as the Astra, Insignia, and Mokka are out of the question for the time being. If Opel was chosen to be one of the brands PSA would sell in the U.S., they might not have a full line of vehicles to sell due to this clause.
      3: What does the future hold for Buick and Holden?
      If there are some losers from the sale of Opel, it has to Buick and Holden. Buick has found some success with Opel products as the Encore (rebadged Mokka) has become one the best-selling models for the brand. Holden is getting a shot in the arm as the Astra will hopefully help their fortunes in the compact space, and the new Commodore (rebadged Insignia) has a tough task ahead of it with living up to an iconic name. For the time being, Opel will continue supplying models to both brands. It is what happens in the future that many are concerned about.
      During the Geneva Motor Show, GM President Dan Ammann said something very interest to Australian journalists about the future of Holden’s products.
      This makes sense as the Astra was only launched and the Commodore is getting ready to go on sale. But I wouldn’t be surprised if talks begin very soon about this very topic. The same talks are likely to begin at Buick soon where they face the same issue for the Regal and Encore. Our hunch is Buick might have the easier time of two. The Encore would continue on since it shares the same platform as the Chevrolet Trax. As for the Regal, it could leave Buick’s lineup once the next-generation model runs its course.
      4: Does GM lose anything with this deal?
      There has been a lot of talk about how much money will be freed up from the sale of Opel/Vauxhall for GM, along with making a bit more profit. But it comes at a cost that could hurt GM down the road. The recent crop of compact and midsize sedans from GM owe a lot to Opel’s engineering knowledge. Vehicles that excel in driving dynamics and fuel economy are worth their weight in gold when it comes to the European marketplace. As we know, one part of why GM went into bankruptcy was the lack of competitive small and midsize cars that got good fuel economy. Opel would prove to be GM’s savior with this key knowledge.
      Right now, compacts and midsize sedans aren’t selling as consumers are directing their attention to crossovers and SUVs. This is due in part to lower gas prices. But sooner or later, the price of gas will go back up and cause many to go back to smaller vehicles. With talk about GM scaling back on their small and midsize car lineup, this decision could have consequences down the road. Plus with Opel out of the picture, GM doesn’t have someone it can rely on to get these models back to the forefront. We can hope GM’s North American office has learned some stuff when working with their European counterparts.

      View full article
    • By William Maley
      General Motors seems being in a cutting mood as it drives to improve its profit margins and stock price. Last week saw the sale of Opel and Vauxhall to PSA Group and it's only the beginning said GM CEO Mary Barra.
      Automotive News reports that GM is considering reducing investments in North American cars and "select" international markets according to a chart that was shared during a conference call with analysts last week. The chart says these two earned a spot on the chopping block due to low profit potential and weak strength in franchises.
      "There's a little bit more work that we're doing in the international markets. Our overall philosophy is that every country, every market segment has to earn its cost of capital," Barra said on the conference call. 
      Barra and GM President Dan Ammann declined to go into details about these plans.
      GM has already made significant changes in terms of their international operations by ending or reducing operations Australia, Indonesia, Russia, and Thailand. The automaker has also scaled back plans in India. The comments made during the call suggest more cuts could take place here and possibly elsewhere.
      As for 'reducing investments in North American cars', this likely means GM is taking a hard look at various segments in passenger car segment. With consumers trending towards utility vehicles and trucks, sales of passenger cars have been falling precipitously. As of March 1st, dealers had four month's worth of inventory of cars, compared to an 81-day supply for light trucks and less than 60-days for full-size SUVs. GM could walk away from certain segments such as compacts or full-size sedans, or delay investments in certain models.
      These moves will allow GM to funnel money into models that make more money, and returning capital to shareholders.
      "That's an immediate opportunity for us to reward shareholders without changing the risk profile of the company or our ability to manage through a downturn," GM CFO Chuck Stevens said.
      Analysts are mixed on GM's plans.
      "It takes a lot of discipline to shift away from a volume-is-king kind of mentality," she said. "In the end, that's going to make a better GM -- a longer-standing company that's not only more profitable but more relevant," said Rebecca Lindland, a senior analyst with Kelley Blue Book to Automotive News.
      John Murphy, an analyst with Bank of America Merrill Lynch isn't so sure about this plan.
      "It appears that GM's recent decision-making has become much more short-term-focused and, in our opinion, could create challenges for the company in the coming years," Murphy wrote in a report.
      Source: Automotive News (Subscription Required)

      View full article
    • By William Maley
      General Motors seems being in a cutting mood as it drives to improve its profit margins and stock price. Last week saw the sale of Opel and Vauxhall to PSA Group and it's only the beginning said GM CEO Mary Barra.
      Automotive News reports that GM is considering reducing investments in North American cars and "select" international markets according to a chart that was shared during a conference call with analysts last week. The chart says these two earned a spot on the chopping block due to low profit potential and weak strength in franchises.
      "There's a little bit more work that we're doing in the international markets. Our overall philosophy is that every country, every market segment has to earn its cost of capital," Barra said on the conference call. 
      Barra and GM President Dan Ammann declined to go into details about these plans.
      GM has already made significant changes in terms of their international operations by ending or reducing operations Australia, Indonesia, Russia, and Thailand. The automaker has also scaled back plans in India. The comments made during the call suggest more cuts could take place here and possibly elsewhere.
      As for 'reducing investments in North American cars', this likely means GM is taking a hard look at various segments in passenger car segment. With consumers trending towards utility vehicles and trucks, sales of passenger cars have been falling precipitously. As of March 1st, dealers had four month's worth of inventory of cars, compared to an 81-day supply for light trucks and less than 60-days for full-size SUVs. GM could walk away from certain segments such as compacts or full-size sedans, or delay investments in certain models.
      These moves will allow GM to funnel money into models that make more money, and returning capital to shareholders.
      "That's an immediate opportunity for us to reward shareholders without changing the risk profile of the company or our ability to manage through a downturn," GM CFO Chuck Stevens said.
      Analysts are mixed on GM's plans.
      "It takes a lot of discipline to shift away from a volume-is-king kind of mentality," she said. "In the end, that's going to make a better GM -- a longer-standing company that's not only more profitable but more relevant," said Rebecca Lindland, a senior analyst with Kelley Blue Book to Automotive News.
      John Murphy, an analyst with Bank of America Merrill Lynch isn't so sure about this plan.
      "It appears that GM's recent decision-making has become much more short-term-focused and, in our opinion, could create challenges for the company in the coming years," Murphy wrote in a report.
      Source: Automotive News (Subscription Required)
  • Recent Status Updates

  • Who's Online (See full list)