Another 8 Million Cars Recalled. Was the GM Bailout Worth It?

Tuesday, July 01, 2014

Pictures of people killed in GM cars with defected key switches were put of the ledge of the hearing room as GM CEO Mary Barra testifies before Congress. April 1, 2014 (Mark Wilson/Getty)

On Tuesday, General Motors announced yet another recall, saying that more than 8 million vehicles—some dating all the way back to 1997—are at risk of having faulty ignition switches. The recall includes models of the Cadillac CTS and SRX, the Chevrolet Malibu, Monte Carlo and Impala, the Oldsmobile Intrigue and Alero, and Pontiac Grand Am and Grand Prix.

This latest recall brings the total number of vehicles recalled by GM this year to 28 million, and it comes on the heels of an announcement by the company that it will be doling out at least $1 million to each family whose loved ones died in accidents caused by the glitch.

Trading on GM stock was suspended on the New York Stock Exchange while that announcement was made. Today, as the company announces its monthly sales figures, uncertainty is once again swirling around GM's future, leading many to ask: Why did America bailout GM? And was it worth it?

Bill Koenig covers the automotive industry for Forbes.com. He weighs in on this latest recall, and the company's long-term future. 

Guests:

Bill Koenig

Produced by:

Mythili Rao

Editors:

T.J. Raphael

Comments [6]

Michelangelo from Miami FL

@RUCB_Alum. Your second attempt didn't make you sound any less a sociopath.

Baby boomers especially like to say, "Let it fail" without thinking of the consequences to everyone. It's either because they believe retirement disconnects them from the business world or they simply have no understanding of how this works.

Perhaps there's something about the aging "ME" generation that makes them automatically nihilistic. The nation no longer holds that mystique they experienced when they were 12 years old. So it should just end. Boomers will move to retirement villages and let the "clueless" younger generations figure it out and fix it themselves.

Jul. 01 2014 04:11 PM

"Why did America bail out GM? And was it worth it?"

Certainly was. How much compensation could the victims expect from the remnants of GM if we had let it die in 2008?

This way victims get their claims paid and we get a going concern that is committed to doing it better. That's all we could really ever hope for.

I do think that DoJ should prosecute some of the former GM decision makers for manslaughter or at least wrongful death. It's pretty clear that the engineers were making a strict cost/benefit analysis without including the 'time behind bars' factor.

Jul. 01 2014 03:49 PM

@Michelangelo

GM never repaid us. We just sold their stock...at a loss.

I recently rented (and was considering for purchase) a 1.4L Turbo Chevy Cruze - aka Chevy Corolla. Six speed trans, room for four - 5 for short trips, and enough electronics to access digital maps, XM, my Nokia Lumia. Great gas mileage if you drove 'conservatively'.

Now, I'm more inclined to buy one used from a nervous nellie and keep the car key - and ONLY THE CAR KEY - on the FOB.

Can you really put a paper's worth of difference between modern car designs? Ford, Hyundai, Chevy, Honda, Toyota, Volvo, Chrysler, Infiniti, Acura, Lexus and Dodge are all pretty indistinguishable to my eye. Nissan makes their own special brand of ugly. Most of the cars that Europe imports to the U.S. are the luxo-models. BMW, Audi, Daimler. No thanks but definitely something to buy used.

Jul. 01 2014 03:37 PM
Jerrold Richards from Lyle, Washington

Why bail out GM? The real concern, I think, was and remains the fragility of our financial system. Our ruling elite is desperately trying to keep this system lurching along, using every trick they can think of. Generally the more a person knows about the situation, the more concerned, even terrified, they are.

Personally, I think efforts to maintain this system are doomed to fail eventually, and I think trying to put off the reckoning only will make it worse. But nobody wants it to happen on their watch.

If I were a decision-maker, I'd be trying to do the same, probably. If, well I'll say when, this system fails, it will be several levels of magnitude more serious than financial crises of the past, South Sea Bubble, Great Depression, whatever. System breakdown, starvation, mass death, the end of most large organizations such as corporations or nations, population crash, that the level of magnitude, I think. I'd be happy to be wrong, but I don't think I am.

Jul. 01 2014 12:29 PM
Larry Fisher from Brooklyn, N.Y.

We needed to bail out GM during the Recession, but they have now chosen to let their vehicles stall out and their customers to die on their "Highway To Hell."

Jul. 01 2014 11:36 AM
Michelangelo from Miami FL

Dumbest. Question. Ever. GM repaid already and America keeps making cars. All the cars with problems are from the days when GM management stopped running the company and used the facilities as a place to meet up before a day on the golf course. Now we keep the jobs, manufacturing, and more importantly, the KNOW-HOW. Folks don't seem to know how vital GM's R&D is to the country. Japanese cars lack passion and European cars lack affordability. This in-between spot is where American cars shine. We make cars people can both LOVE and AFFORD.

Jul. 01 2014 10:03 AM

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