Two Reasons The GM Recall Is Unlike Any Recall We've Ever Seen

The recall of 2.6 million General Motors cars is unlike any recall we've seen before, but not for its scale or legal implications.

The recall includes seven GM models made between 2003 and 2007, which may have faulty ignition switches that can flip out of the "run" position while the car is moving, turning off the engine, cutting some electric power, and disabling the airbags.

Crashes caused by the defect have been connected to 13 deaths.

There are fewer cars and fewer deaths involved here than in recalls by Toyota between 2009 and 2011 related to unintended acceleration.

What makes the GM situation unprecedented is that the government agency responsible for keeping an eye on things is being criticized for sleeping on the job, and because it involves vehicles built by a company that doesn't exist anymore.

The Sleeping Watchdog

On Tuesday, GM CEO Mary Barra and the acting head of the National Highway Traffic Safety Administration David Friedman will testify before the Oversight and Investigations Subcommittee in a hearing titled, "The GM Ignition Switch Recall: Why Did It Take So Long?"

In a memo previewing the hearings, the House Committee on Energy and Commerce pointed out the agency's failure to open an investigation when it had evidence of a problem, asking "What prevented NHTSA from identifying a safety defect in GM recalls relating to airbag non-deployment?"

The last time NHTSA was accused of inadequately responding to vehicle defects was during the recall of Ford vehicles with Firestone tires in 2000, Kelley Blue Book Senior Analyst Karl Brauer said in an interview.

After that, NHTSA "was supposed to make some changes" to how they investigated possible defects, Brauer said, adding, "it apparently didn't work." As more information related to the GM recalls is revealed, "there's more and more proof that NHTSA did see this pattern" of crashed GM cars where the airbags didn't deploy, Brauer said.

John Alan James, executive director of the Center for Global Governance, Reporting and Regulation at Pace University's Lubin School of Business, agreed. "They knew about this twice and they failed to open any probes," he told Business Insider, referring to NHTSA decisions in 2007 and 2010 not to investigate instances of airbag non-deployment in 2007 Chevrolet Cobalts.

Attorney Bob Hilliard of Hilliard Munoz Gonzales in Texas, who represents families of victims who have died in crashes related to the recalls, said in an interview that compared to giant automakers, NHTSA is just "a chihuahua guarding a dragon." The agency promised it would do better in the wake of the Firestone tire episode, he said, but hasn't lived up to that. It's "incapable of protecting the public" from powerful automakers, Hilliard said.

"Old GM"

The term "new GM" is not a marketing gimmick - in filing bankruptcy, General Motors Corporation ceased to exist, and General Motors Company rose up in its place. That not only gives the automaker a potential layer of protection from liability, it provides a convenient public relations defense.

There's evidence to suggest that the company had "absolute knowledge" of the defects that will likely lead to some harsh questioning, Brauer said. But he noted that "there's a viable argument for Mary Barra and GM to make" that the concerned vehicles are old models built by departed leaders of a defunct company.

In recent months, GM has been more prudent about issuing recalls, a sign that the company is now more on top of potential issues than it has been in the past. Barra has shown herself to be "very forthright, very transparent," and GM as a whole "seem[s] to be more proactive" these days, Brauer said. Barra's prepared remarks for tomorrow's hearings (provided by GM) prove Brauer's point.

"As soon as l learned about the problem, we acted without hesitation. We told the world we had a problem that needed to be fixed," Barra will say. "We did so because whatever mistakes were made in the past, we will not shirk from our responsibilities now and in the future. Today's GM will do the right thing."

For Hilliard, the "old GM" defense doesn't hold water, "not if their conduct is defined by how they address the ongoing safety issue." The current leadership can't be blamed for making cars that have killed people, but they are accountable for how they deal with getting the cars fixed, he added.

GM has not instructed customers to stop driving their cars, saying the recalled vehicles are fine even before new parts are installed: "The GM engineers have done extensive analysis to make sure if you use only the ignition key with no additional items on the key ring, that the vehicle is safe to drive," the company has told owners.

Making things difficult is the downside of the "old GM" defense: It's really hard to track down and fix cars that were build more than a decade ago. "Just locating them is going to be difficult," Brauer said. Many of the vehicles will have changed hands, and GM won't necessarily know who the new owners are, or how to reach them.

"It will take months," Kelley Blue Book executive editorial director and market analyst Jack Nerad said in an interview. "Some of these parts aren't even available." The new ignition switches will be available starting in April, GM says.