General Motors CEO Mary Barra says the automaker will double down on its attempts to get owners of vehicles with defective ignition switches to bring their cars in for repair since enough replacement parts have been produced.
“We are stepping up our proactive outreach to customers who have not yet brought their vehicles in for repair,” Barra says today in a conference call with Wall Street analysts to discuss the automaker’s $1.38 billion third-quarter profit.
GM previously targeted the October timeframe to complete repairs to 2.4 million North American-built small cars and CUVs, mostly out-of-production Chevrolet Cobalts, still on the road. The automaker reports today 1.3 million units, or 52.7% of the total, have been fixed. That leaves roughly 1.1 million still awaiting repair.
Automakers typically conduct mass mailings to alert owners of recalls, but given the gravity of the ignition-switch campaign launched earlier this year GM has taken additional steps.
Those include targeting owners online, through social media and e-mail, over the telephone and via dealers. GM has conducted research to better understand those owners, establishing their identity and where they live, and most recently opened a national call center with 72 advisers reaching out to 100,000 owners.
Ignition-switch recall communications are conducted in English and Spanish, GM says, and the automaker is providing dealers with tools such as a best-practices guide encouraging them to host special events, extend regular business hours and offer owners courtesy transportation. Dealers also are pitched unspecified incentives to reach out to owners of recalled vehicles.
The defective ignition switch can be deadly if not repaired. So far this year, a GM victims’ compensation fund has cited the part in the confirmed deaths of 29 motorists. The automaker says another 27 people have been confirmed seriously injured. The switch can slip out of the “run” position, shutting off the engine and disabling safety equipment such as the airbags.
So far this year, GM’s recalls, including many vehicles unrelated to the ignition-switch campaign but motivated by an extensive safety review in the wake of that recall, have cost the automaker $2.7 billion. It has set aside an additional $400 million for the victims’ compensation fund related to the ignition-switch recall.
GM has conducted a total of 75 campaigns affecting 26.5 million vehicles in the U.S. and 30 million built in North America. GM this year has recalled an estimated 60% of the 50 million vehicles it has built in North America since 2002, when production of cars with the defective ignition switch began, according to WardsAuto data.
Barra’s remarks on the ignition-switch recall are among the highlights of the earnings conference call, where she also shares news about GM’s progress rehabilitating its European operations, including the strategy for a depressed Russian market, and the automaker’s ambitions for the Cadillac brand.
The CEO targets profitability for its Opel/Vauxhall unit for 2016 after more than a decade of annual financial losses.
“Europe continues to show operational improvement, despite the headwinds in Russia,” she says.
Barra expects the fifth-generation Corsa small car, which launches later this year, and the new Astra small car coming next year to drive profitability in Europe. She estimates a $900 improvement in variable profitability per unit for the Corsa, and $1,250 per unit on the Astra.
“Together, these two models will represent half of Opel/Vauxhall’s volume,” Barra says.
The depressed Russian market, down 12.1% through August, recently compelled GM to perform restructuring related to its St. Petersburg assembly plant. Actions include appointing a new president and managing director for GM Russia, speeding up localization of parts supply and offering buyouts to 500 of the 2,000 employees at St. Petersburg.
Barra reiterates GM’s ambitious plans for growing its Cadillac luxury brand, which recently became a separate business unit under the leadership of former Infiniti and Audi of America boss Johan de Nysschen. De Nysschen’s team, Barra says, is “prepared to make bold moves to accelerate the brand’s global growth.”
Barra, de Nysschen and GM President Dan Ammann recently met with Cadillac dealers to detail a plan meant to match perception of the brand with the world-class products in its portfolio.
“This includes investing in every customer touch-point and expanding the Cadillac portfolio with the ATS Coupe, the ATS-L in China and the CT6, which will be the most technologically advanced Cadillac ever built.”
