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Years before recalls, GM missed red flags from rental companies

By Jeff Plungis and Tim Higgins Bloomberg News

This article was published August 3, 2014 at 2:28 a.m.

More than seven years before General Motors Co. began the biggest wave of auto recalls in history, an investigator for Vanguard Car Rental USA Inc. contacted the carmaker about a fatal rollover crash in California.

A driver in a new Chevrolet Cobalt rented from Vanguard's Alamo unit lost control on a warm, dry and clear day in September 2006. Traffic had been light, according to the police report. The sedan drifted across lanes, got caught in a gravel median and rolled over. The seat belt was buckled. The air bag didn't deploy. The driver was killed.

A Vanguard claims adjuster wrote to GM and said even though the cause of the crash wasn't immediately known, "due to the serious nature of this accident we feel that it is imperative that you open a claim and inspect this vehicle for possible defects," according to a review of documents obtained by Bloomberg News after a Freedom of Information Act request.

Vanguard wasn't alone in its concern. Customer-service call transcripts, warranty records, letters and police reports show Enterprise Holdings Inc. had pressed the largest U.S. automaker about a potential Cobalt defect because air bags failed in routine crashes. Avis Budget Group Inc. and Hertz Global Holdings Inc. also had Cobalts in their fleets that crashed.

"If there is a canary in the coal mine, it's the rental car companies," said Maryann Keller, an industry consultant who was a board member at Dollar Thrifty Automotive Group Inc. from 2000 to 2012. "They were the first users of the vehicles en masse."

Missed Opportunities

The files obtained are among scores exchanged between GM and the U.S. National Highway Traffic Safety Administration over an 8-year period beginning in 2005 related to cars stalling and air bags not deploying in crashes. In the files GM submitted, there were 30 crashes involving 37 fatalities in the Cobalt and the Saturn Ion. The victims' names were redacted.

The documents add to the evidence that suggests GM for at least a decade failed to promptly resolve mounting complaints from rental-car companies, consumers, automotive reviewers and even its own dealers and mechanics about abnormal crashes that have since been linked to a faulty ignition switch.

The files show many missed opportunities to ask questions and connect disparate events -- the very type of evidence that is supposed to be routed to and vetted by the government's Early Warning Reporting system for potential automotive defects.

There's no indication in the files whether GM followed through with the vehicle inspection requested by Vanguard in the Barstow, Calif., crash. GM did tell the safety administration that there may not be sufficient information to assign cause to the accident. Enterprise in 2007 bought Vanguard's Alamo and National brands.

Alan Adler, a company spokesman, declined to discuss specific cases. He said the automaker has modified how it handles product defect questions raised by rental-car companies and other fleet customers.

GM's decision to change some of its safety-monitoring practices came after it had to order recalls earlier this year for the Cobalt, Ion and four other U.S. models for a flaw that had been kept from the public for at least a decade. The automaker has said that those cars -- about 2.6 million of them -- may have had faulty ignition switches that when bumped could shut off engines while driving and disable air bags.

By the end of June, the number of cars in North America that GM had called back for repairs related to the ignitions had passed 16 million, more than the 9.71 million vehicles the Detroit-based company sold worldwide in 2013.

Unfamiliar Drivers

The role of rental cars in the GM ignition-switch controversy hasn't been fully examined. Rental cars tend to be driven a lot of miles. They're used by different drivers all the time, many of whom are unfamiliar with the vehicle.

That can be the difference in surviving and perishing in an emergency situation, said Clarence Ditlow, executive director of the Washington, D.C.-based research group Center for Auto Safety.

"The Cobalt was a popular, cheap model for rental-car companies," Ditlow said. "This highlights why they should be vigilant about handling recalls."

U.S. Sen. Barbara Boxer, D-Calif., raised the issue of rental-car repairs with GM Chief Executive Officer Mary Barra during a July 17 hearing on the ignition-switch recall.

GM now backs legislation sponsored by Boxer and Sen. Charles Schumer, D-N.Y., that would prohibit rental-car companies from renting or selling vehicles subject to a recall that haven't been repaired.

In another case involving a rental car belonging to Enterprise, a woman and her ex-husband were killed in a March 2005 crash in Bee Cave, Texas, after she lost control of a rented Saturn Ion on a rural road. Their teenage daughter, riding in the back seat, suffered serious injuries including brain damage. A police officer on the scene attributed the crash to a braking and steering defect.

Enterprise, noting potential lawsuits, asked GM for an investigation, including an inspection of the car, according to a Saturn customer-assistance center summary.

A July 2005 letter, two months after the initial back-and-forth between Enterprise and GM, shows Enterprise's contractor ELCO telling GM it had the vehicle inspected and didn't find a defect or malfunction.

In a January 2006 crash in Bucks County, Pa., a police report indicated air bags didn't deploy after a 2006 Cobalt rented from Enterprise slipped off the road and hit a tree, killing the driver.

There was an extended effort to gather information about the crashes, including from the rental companies and the broader consumer fleets. None of the inquiries from the U.S. safety administration or the responses from GM gave the agency enough evidence to open a formal defect investigation, a step that could have prompted regulators to order a recall.

The records show that GM's customer service unit referred the case to an investigations unit. There are no records included that show what happened after that.

The case files obtained by Bloomberg News show exchanges between the safety administration and GM covering 81 crashes. The inquiries were part of the agency's "early warning" system, which by its nature sweeps up a lot of disparate information. Not all of the cases are clearly tied to the ignition-switch defect.

The safety administration asked for more information about fatalities that may have involved air-bag failures. Agency investigators never took the next logical step: opening a formal investigation that may have pinpointed a safety defect years before GM itself acted.

Other accidents

At least nine cars owned by rental-car companies are in the crash files as part of investigators' evaluation of air-bag failures.

In the 2006 Bucks County crash, an Enterprise claims adjuster asked GM "to set up a claim for a possible defect in the 2006 Chevrolet Cobalt that they rented to a customer," according to call transcripts from the automaker. "Party of deceased wants vehicle inspected for defects. The air bags did not deploy and the police report states the deceased hit tree for unknown reason."

The police report indicates the possibility of distraction, driving too fast and over correcting or under correcting on a curve. Roads were wet from rain but the pavement wasn't cold enough to freeze.

"Manufacturer indicates that their investigation did not include an assessment of the alleged defect," reads the safety administration's summary of the case file from Feb. 9, 2007. Agency investigators found two complaints and seven field reports relating to air-bag failures.

Christine Cavallini, a spokesman for Enterprise in St. Louis, said the company couldn't locate records related to the crashes that occurred eight and nine years ago. There isn't enough identifying information in the case files redacted by the government, she said.

Cavallini said she was unaware of any general safety issues that Enterprise might have had involving the Cobalt or Ion.

The documents obtained by Bloomberg do show direct correspondence by an Enterprise contractor to GM about the Texas crash, and phone calls between GM and Enterprise about the Pennsylvania accident.

Keller, the former Dollar Thrifty director, said the warnings from the rental car companies should have been a red flag to GM.

"It's really like a test fleet," she said. "You put a lot of miles on very quick, and any initial defects on the car rise to the surface, and, in fact, that's the way auto companies were supposed to use this. They were supposed to be able to detect defects very early."

SundayMonday Business on 08/03/2014

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