February 26, 2014 at 1:00 am

Feds investigating GM's handling of ignition switch recall

Ignition and key chain for a 2007 Saturn Ion. (John T. Greilick / The Detroit News)

Washington— The National Traffic Highway Safety Administration said Wednesday it is opening a formal investigation into General Motors Co.’s handling of a recall of more than 1.6 million older cars because of faulty ignition switches.

Thirteen deaths and 31 crashes in which air bags failed to deploy have been linked to the issue.

NHTSA said in a statement it has “opened an investigation into the timeliness of General Motors’ recall of faulty ignition switches to determine whether GM properly followed the legal processes and requirements for reporting recalls.”

NHTSA also urges owners and drivers to follow GM’s recommendation to “use only the ignition key with nothing else on the key ring” when operating their vehicle and to seek permanent repairs from GM as soon as replacement parts become available — but that won’t be until April, the automaker said.

Separately, The Detroit News has learned that GM has hired an outside law firm to conduct a full review of the issue.

NHTSA is reviewing GM’s recall of 2005-07 Cobalts and other similar cars. Earlier this month, the automaker said it would recall 788,000 vehicles but didn’t recall all models with the same suspect part. On Tuesday, GM announced it was doubling the size of the recall to 1.62 million worldwide, including about 1.37 million in the United States.

GM could face a maximum fine of $35 million if it failed to recall the vehicles within five days of determining they posed an unreasonable risk to safety. It also faces tens of millions of dollars in costs to recall the vehicles.

The Justice Department may also decide to investigate GM’s handling of the issue. In 2010, the U.S. Attorney’s Office in Manhattan opened a criminal investigation into Toyota Motor Corp.’s handling of sudden acceleration recalls and whether it misled federal regulators. The News and other outlets reported this month that Toyota is close to reaching a deal to settle the case that could top $1 billion.

The outside review will carefully scrutinize decisions by GM over a decade, and the automaker’s initial decisions not to recall the cars but instead issue a technical service bulletin to dealers. GM North America President Alan Batey apologized Tuesday for the company’s handling of the issue and said in a statement that its review was flawed.

The law firm — which GM officials would not name — is conducting an extensive review of the company’s actions.

GM could face other fallout, including new lawsuits over the problem. The automaker already has settled at least two suits involving fatal Cobalt crashes. Congress could opt to hold hearings. Sean Kane, a safety advocate, said the recall could prompt Congress to scrutinize NHTSA and look at how fast it is responding to safety issues.

Also Wednesday, Sen. Ed Markey, D-Mass., called on NHTSA “to require auto manufacturers to provide detailed information to the agency when they first become aware of incidents involving fatalities.”

A chronology GM turned over to NHTSA on Monday showed GM downplayed the ignition switch issue in prior years, including canceling in 2005 an approved redesign of the ignition key head. By the end of 2007, GM said it knew of 10 frontal crashes in which air bags didn’t deploy — linked to the ignition problem — but the automaker opted not to recall the cars. Of the 13 deaths reported by GM as linked to the issue, the last occurred in December 2009.

Lance Cooper, an attorney in Marietta, Ga., sent a letter last week to NHTSA asking for a timeliness-query investigation into GM’s recall.

Cooper is representing a Georgia couple whose daughter died after a 2010 crash in a 2005 Chevy Cobalt in which the car’s ignition was in the accessory position. GM should face civil penalties for not taking action sooner, he said.

Cooper in his letter to NHTSA said discovery in a civil suit his clients settled with GM last year indicated GM knew of “dozens of incidents where drivers of Cobalts experienced engine stalling as a result of the key moving from the run to accessory/off positions during ordinary driving conditions.”

Cooper, in the request, said GM knew of more than 50 incidents of engines stalling after 2005, and that those reports, the six deaths mentioned in GM’s Feb. 13 recall and his client’s death were not mentioned in a chronology leading to the recall of Cobalt and Pontiac G5 vehicles. Chevy HHRs and Saturn Ions also are involved.

“They didn’t know five days before, they knew nine years before,” he said Wednesday.

GM began investigating the issue in 2004 after receiving a report of an ignition key moving out of place in a 2005 Cobalt and the vehicle losing power. GM replicated the problem in testing, but opted not to fix it “after consideration of the lead time required, cost and effectiveness of each of the solutions,” according to documents.

After more reports in 2005 of problems, GM approved a redesign of the ignition key head, but canceled it. In 2007, NHTSA told GM of a July 2005 fatal crash involving a Cobalt in which the air bags didn’t deploy and the diagnostic module showed the key was in the “accessory” mode. GM began investigating and had learned of 10 frontal crashes by the end of 2007; the key was in the accessory position for four of the crashes.

Victor Garcia called his dealer and GM’s Chevrolet customer service department to find out how he could get his 2006 Chevy HHR fixed.

Garcia, 29, of Bakersfield, Calif., said the dealer didn’t have the HHR listed as part of the recall and GM’s customer service agent didn’t know about it. Garcia said a supervisor had heard about it but had no details. “You think GM would have told their dealerships and the customer service (staffs) that the HHR was covered in the recall,” he said.

Correction The story box has been corrected to say 2007 Pontiac G5 and 2007 Saturn Sky.

dshepardson@detroitnews.com