Is General Motors a Healthy Stock for Your Portfolio?
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General Motors designs, manufactures, and markets cars, crossovers, trucks, and automobile parts worldwide. The company markets its vehicles primarily under the Buick, Cadillac, Chevrolet, GMC, Opel, Holden, and Vauxhall brand names, as well as under the Alpheon, Jiefang, Baojun, and Wuling brand names. It sells cars and trucks to dealers for consumer retail sales, as well as to fleet customers in daily rental car companies, commercial fleet customers, leasing companies, and governments.
Senate investigators are widening the scope of the inquiry into General Motors’ decade-long failure to recall cars with a defective ignition switch to also focus on the supplier that made the flawed part. The supplier, Delphi, did not permit its employees to be interviewed by Anton R. Valukas, the former United States attorney who conducted an internal inquiry into G.M.’s handling of the switch problem and this month produced a scathing report on the automaker’s corporate culture. But the Senate Commerce Committee, which has the power to subpoena witnesses, unlike Mr. Valukas’s company-financed investigation, is expected to make Delphi a subject of a hearing soon. The hearing has not yet been scheduled, though. Delphi employees have had informal meetings with congressional staff members, according to a person briefed on the matter. The forum would be the first substantial public inquiry into the company’s role in a safety issue that has led to a half-dozen federal and state investigations, hundreds of lawsuits, and virulent public criticism. In two previous hearings before a House subcommittee, Delphi and its role in the safety crisis largely escaped scrutiny. Scores of documents made public by a House committee on Thursday contain a number of exchanges between G.M. engineers and Delphi employees over an ignition switch that both parties recognized as below standard. The force needed to turn it, or torque, was so low that it could, if jostled or bumped, suddenly switch off the power of a moving car, disabling air bags and impeding power brakes and power steering. G.M. now links the defect to at least 13 deaths and 54 accidents, and has recalled 2.6 million Chevrolet Cobalts, Saturn Ions and other small cars as a result.
The documents indicate that multiple Delphi employees knew that the lead switch engineer, Raymond DeGiorgio, who has been dismissed by G.M., had signed off on an upgrade to the ignition switch in 2006 without recording the change with a new part number. One Delphi document from April 2006 said, “Ray DeGiorgio agrees to implement” a new switch “without changing” the G.M. part number. Delphi did not immediately return a request for comment. Some of the documents were cited in the Valukas report, but the full text had not been public until the House released the correspondence on Thursday. Another document identifies a G.M. employee, Dan Fernandez, as a recipient of an email about a “proposed action” by Delphi that would “increase torque force” in a revised switch. Altogether, the documents show that numerous Delphi employees were aware of the switch change. Beyond Delphi’s role, the documents released on Thursday also underscored how long G.M. employees had grappled with the switch problem. Doug Wachtel, a senior manager for internal investigations at G.M., wrote on March 29, 2012, to colleagues to say that his team would be looking into the complaint history for heavy key chains potentially turning from the “on” position to the “accessory” position, which turns off the engine but allows certain electronics like the radio to operate, and would be obtaining engineering data on the ignition switch.