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Vol 106 / Issue 20

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Page 42 of 47

MONEY By Schuyler Velasco Staf writer It's been a bad two months for General Mo- tors. In late February, the world's second largest au- tomaker recalled 1.6 mil- lion vehicles worldwide that were equipped with faulty ignition switches. In the weeks that fol- lowed, the federal gov- e r n m e n t l a u n c h e d a n investigation after GM admitted that it had been aware of the problem, which is responsible for dozens of accidents and at least 12 deaths, for nearly a decade without alerting authorities or the general public. Chief executive of- ficer Mary Barra launched into full damage control mode, apologizing pub- licly and making drastic changes to her company's safety oversight process. She hired Jeff Boyer as GM's new safety czar and soon announced three separate recalls for a spate of seemingly minor production flaws affecting an additional 1.55 mil- lion vehicles in the United States. Recent history suggests things will get worse for GM before they get bet- ter. Toyota was just slapped with a $1.2 billion government fine and a criminal charge for its lack of transparency in dealing with an acceleration issue that eventually led to a recall of millions of its cars from 2009 to 2010. Ms. Barra has said that she expects to have to tes- tify before Congress as part of the GM probe, which will ensure that the auto- maker's name remains in the news in a bad way for months, if not years. Safer, more complex cars GM's current problems are serious, but such large-scale vehicle defects are starting to seem routine to those who follow car news with any regularity. There's a reason for that: US auto recalls surged 34 percent from 2012 to 2013, ac- cording to the National Highway Traffic Safety Administration (NHTSA). Honda recalled at least 885,000 minivans the same week the government announced its investigation into GM. In February, Toyota recalled more than 1.9 million Prius cars because of a software glitch. Recalls of smaller numbers of vehicles – such as the recent 4,453 BMW motor- cycles and scooters and 18,690 Dodge Durangos – are announced nearly every day of the week. The good news is that this seemingly unending stream is actually a side effect of US automakers building safer cars, says Joe Phillippi, an industry analyst and president of AutoTrends Consulting in Andover, N.J. "Safety technology is a lot more democratic than it was even three years ago," he notes. "Now, even little cheap cars like a Mazda 3 compact have features that you could only get in [Mercedes-] Benzes and BMWs before. Lane departure warning systems, sta- bility control, electronically controlled brake force distribution – nothing is ex- clusive to high-end cars anymore." As cars become more complex, however, problems – and subsequent recalls – become more frequent. And as car parts become more expensive and complicated, there is less diversity in suppliers. For example, Faurecia, a large global auto producer, manufac- tures seats and other auto parts for Nis- san, Volkswagen, Ford, and GM, among others. If, theoretically, something goes wrong with one of its products, it could prompt a recall affecting several automakers. Nevertheless, driving in the US is safer than ever and continues to im- prove. The number of traffic fatalities fell 26 percent between 2005 and 2011 and 3.7 percent in the first nine months of 2013, accord- ing to statistics from the NHTSA, and an increas- ing number of those are due to nonvehicle factors like cellphone use. More accountability Despite those improve- ments, critics are still ques- tioning the strength of US auto safety regulations, especially since the GM switch problem went unad- dressed for so long. "Here we are ... faced with acci- dents and tragedies, and significant questions need to be answered," House Energy and Commerce Committee chairman Fred Upton (R) of Michigan said in a press statement announcing the federal probe. "Did the company or regulators miss something that could have flagged these problems sooner? If the answer is yes, we must learn how and why this happened, and then determine whether this system of reporting and analyz- ing complaints that Congress created to save lives is being implemented and working as the law intended." Aside from lawmakers, Mr. Phillippi notes, automakers are under myriad pressures to protect their reputations and quickly address any problems that arise. Watchdog groups like J.D. Power and Associates and Consumer Reports yield enormous influence over buying decisions, and the rise of online forums and customer review sites means even the most minor complaints with a prod- uct get around very quickly. "Car com- panies get dinged now for everything, down to the way the cup holder feels," he says. That could make it much harder for GM to recover, Phillippi notes, though he thinks that Barra and the company grasp the importance of being com- pletely transparent going forward. "They'll be battling that cocktail party, word-of-mouth damage for a while, but they're doing their best to deal with this in a forthright manner." As Toyota and now GM have pain- fully learned, there may be no other way in today's consumer landscape. r Carlos Barria/reuters/File If cars are safer, why more recalls? GrEatEr lEGal aNd cONsuMEr scrutiNY fOrcEs MOrE striNGENt staNdards. thE christiaN sciENcE MONitOr WEEklY | april 7, 2014 43

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