GM recall a "thunderbolt" for auto dealers who want faster fix

March 17 Mon Mar 17, 2014 2:54pm EDT

March 17 (Reuters) - General Motors dealers are frustrated the automaker is not telling them more about the recall of 1.6 million cars after a string of deadly accidents, and many say a delay of several weeks before a fix is ready is bad for business.

The company has said that 12 people have died in accidents related to an ignition switch problem, first observed by GM more than a decade ago, and the long road to a recall has raised questions about whether GM is truly a different company after emerging from bankruptcy.

Reuters spoke with dealers across the nation over the weekend, and on Monday GM recalled another 1.5 million vehicles for a different set of issues, including side airbag deployment.

The earlier recall has not yet started in earnest. Replacement parts to swap out a faulty ignition switch that could cut off a car's engine and disable its airbags won't be available until the second week of April, GM said on Monday.

Information that GM knew about the problem as early as 2001 but initiated the recall only last month, coupled with sparsely worded emails about what dealers should expect and do to solve the problem, has fueled frustration with the company, several dealers said when visited by Reuters reporters.

"It does not seem like GM was very forthcoming about this issue and so it hit us like a thunderbolt," said Al Cerrone, in the showroom of his family owned Cerrone Chevrolet Buick & GMC Truck dealership in South Attleboro, Massachusetts. "The feeling that this was being hidden is what is causing the furor now."

GM Chief Executive Mary Barra, in a new video to GM employees made public on Monday, promised to change the company's recall process after "terrible things happened". She said parts supplier Delphi has added a second shift to get as many replacement switches to dealers as quickly as possible.

"We are completely focused on the problem at the highest levels of the company," she said. GM has sent out one set of letters to recall customers and plans a follow-up when parts are available in mid-April.

GM also has set up a team of More than 50 employees at its Warren Customer Engagement Center outside Detroit to provide more recall information to owners by phone, email and social media.

GM dealers will receive a more detailed recall service bulletin the week of April 7, Barra said Monday.

What some dealers and service managers describe as the company's slow handling of a big problem comes at a particularly sensitive time. Dealers are hoping that still-low interest rates and signs of economic recovery would fuel more car sales now after a long winter weighed on sales in January and February.

Service managers at dealerships from New England to California said they were told to prepare for a recall weeks ago but were given no parts or procedures to solve a problem they expect will take less than an hour to repair, eventually.

Still, the roughly one dozen salesmen and service managers contacted by Reuters over the weekend said they expect GM to properly repair the ignition problem on the affected six models, including the Saturn Ion and Chevy Cobalt.

"Recalls are very common and GM always handles them expeditiously, so I am confident that GM is working as hard and fast as possible," said Ray Huffines, who runs Chevrolet dealerships in Plano and Lewisville, Texas.

Most said traffic on their lots has not been impacted because of the recall, which they said would be over soon enough.

"This might make some customers a little skittish but I don't see it having any long term effect," said Dennis Ebenal, who has worked at a dealer in Ellensburg, Washington for 33 years. "People's memories are very short these days."

"THIS COULD COST YOU YOUR LIFE"

But the deaths and now the delays are feeding into what several service managers and some potential buyers called a more negative sentiment that might accelerate, for a time, as news of the recall spreads.

"When people have died it is no longer a tempest in a teapot," said Don Kerstetter, who runs a Chevrolet dealership in Sugarland, Texas.

Until the replacement parts arrive, GM is advising dealers to warn customers that heavy key chains could jostle the key out of place and cause a hazard, a suggestion that has dismayed some potential customers.

"This is the problem right here," said a shopper at Quirk Chevrolet in Braintree, Massachusetts, holding up a key chain with a dangling metal Boston Red Sox logo. "Your entire life is on here, and this could cost you your life," he said, declining to give his name.

Although GM has said 12 people died in accidents related to the malfunctions, industry watchdog Center for Auto Safety has said that more than 300 people died when airbags failed to deploy in two of the models recalled. GM called the report "pure speculation".

The Justice Department is investigating how the company handled complaints about the faulty cars, Congress plans to hold hearings and the National Highway Transportation Administration is giving the company until early next month to answer more than 100 questions about what lead up to the recall.

The problems drove the company's stock price down roughly 10 percent last week to close at $34.09 on Friday.

"It is concerning that it took this long to catch something like this," said Tyler Lloyd, sales manager at Rhinelander GM & Toyota Auto Center in Rhinelander, Wisconsin. "Any time we see stuff like this we get very worried," he added, noting however that a GM representative calmed their fears.

Many managers at dealerships, however, said there has been no additional contact with the company about the recall beyond the routine communications. "It seems like the media got ahead of GM on this one," said John Kitowicz who runs the service department at Cerrone in South Attleboro. "There were emails and they were short and sweet, telling us what to tell the customers about the keys. There has been nothing else."

Asked about dealer frustration with communications, a GM spokesman referred to Barra's Monday statement.

FIRST CALLS

Last week the first calls began trickling into dealerships across the country from anxious drivers. Some dealers do not want to discuss the matter if they do not have to.

"If you don't own that model, you don't need to worry about it," a service advisor at Quirk Chevrolet in Braintree, Massachusetts told a reporter, after asking to see the company's recall letter and to check the car's Vehicle Identification Number. The man declined to give his name.

Gary Loy, a service advisor at Singh Chevrolet in Riverside, California said the company had told him no more than what had been reported in the news.

In Rhode Island, a service advisor at a large dealership said he is turning away customers because he does not have the parts to repair the problem yet.

"I am frustrated," the man who said he is not permitted to speak to the media said, adding, "GM has to step up and do the right thing and they haven't done that in this case. The taxpayers bailed them out and deserve better than this."

One immediate solution GM offers customers who are nervous about their recalled car's safety is to put them into a rental car, said Steve Hurley, who runs Stingray Chevrolet in Plant City, Florida and serves as chairman of the Chevrolet National Dealer Council. "GM is on top of it," he said.

His customers have not taken the company up on the rental offer but in South Attleboro, Massachusetts five of the 20 callers at Cerrone left in rental cars last week, service manager Kitowicz said. "The company makes us jump through all sorts of hoops to rent the customer a car from Enterprise, but they will pay for it."

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