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Critics question strength of auto recall process

Things were supposed to change a decade ago to make the auto recall process more transparent, make automakers more accountable and make vehicles safer for the driving public.

As the General Motors recall on vehicles equipped with faulty ignitions blamed for at least 12 deaths shows, automakers have still found ways to do an end run around the process, leading to congressional hearings, criminal investigations and a rising mistrust among consumers for automakers and regulators alike, experts said.

Transportation Secretary Ray LaHood arrives for a news conference where he announced findings from a 10-month-long National Highway Traffic Safety Administration study into unintended acceleration in Toyota vehicles at the Transportation Department on Feb. 8, 2011.
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Transportation Secretary Ray LaHood arrives for a news conference where he announced findings from a 10-month-long National Highway Traffic Safety Administration study into unintended acceleration in Toyota vehicles at the Transportation Department on Feb. 8, 2011.

Critics are questioning why the National Highway Traffic Safety Administration, the public's auto safety watchdog, let GM sidestep a recall for the ignition switch issues even though the first reports of trouble were sounded as early as 2001.

(Read more: Lawsuit says GM hid ignition defect)

"Here we are … faced with accidents and tragedies, and significant questions need to be answered," said House Energy and Commerce Committee Chairman Fred Upton, a Michigan Republican. "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 analyzing complaints that Congress created to save lives is being implemented and working as the law intended."

Plenty of skeptics

After an estimated 270 people were killed in rollover accidents involving Ford Explorer SUVs and Firestone tires, 6.5 million tires were called in August 2000, and Congress passed the so-called TREAD Act months later. Short for the Transportation Recall Enhancement, Accountability and Documentation Act, it was intended to create a new process by which manufacturers had to reveal known safety-related issues, while encouraging motorists to report their own complaints.

Federal safety regulators and automotive industry officials alike insist the new process is working. The agency itself, in a statement on its website, noted that the tally has been increasing.

(Read more: Something went 'very wrong': GM's Barra)

"Over the last three years, NHTSA's defect and compliance investigations and compliance testing have resulted in over 430 recalls involving 22 million vehicles and products," the website says.

There are plenty of skeptics, though, all the more so since recent revelations that GM may have known for more than a decade that many of its compact cars were equipped with faulty ignition switches that could inadvertently shut off the vehicles and disable their airbag systems—a problem that last month led to the recall of 1.6 million vehicles.

What some are dubbing "Switch-gate" has already spawned a series of investigations, including hearings on both sides of Capitol Hill, a preliminary Justice Department criminal probe, a query by the NHTSA, and an internal investigation at GM ordered by the maker's new CEO, Mary Barra.

The well-publicized scandal was clearly on Barra's mind as, on Monday, the maker announced another three recalls—covering 1.5 million cars, trucks and crossovers—for a series of potential problems, including a possible fire hazard with the Cadillac XTS luxury sedan.

The latest move "underscores the focus we're putting on the safety and peace of mind of our customers," declared Barra, who has to explain why GM not only long-delayed a recall for the defective ignition switches but scrubbed plans that could have replaced them years ago. Going forward, she promised "today's GM" would redouble its effort to spot potential safety problems and resolve them quickly.

More from The Detroit Bureau:
US Justice Dept. launches investigation of GM switch recall
Average American can no longer afford average-price vehicles
Bankruptcy could once again save GM from switch recall lawsuits

On Tuesday, GM hired a new vehicle safety leader, Jeff Boyer, to identify and resolve safety issues.

Still, convincing the public of its resolve might not be easy, especially for a company still trying to recover from the image hit it took coming out of a 2009 bankruptcy only with the help of a massive federal bailout. But GM is by no means the only maker that has had to overcome concerns about its commitment to safety.

Toyota and Honda have each recalled millions of vehicles over the last half decade—more than any other manufacturer, domestic or foreign. The smaller brand last weekend added 900,000 of its Odyssey minivans to the list due to a potential fire hazard. Odyssey also faced recalls over the past year for faulty airbags and possible vehicle runaway problems.

Toyota, meanwhile, is still trying to settle a wave of lawsuits stemming from the so-called unintended acceleration problems that forced it to recall more than 10 million vehicles in 2009 and 2010. Internal documents released prior to congressional hearings revealed the maker celebrating its ability to talk federal regulators out of ordering a costly earlier recall.

(Read more: Yet another recall—this time it's Honda)

Indeed, regulators are feeling a lot more gun-shy these days, with critics questioning why NHTSA let GM sidestep a recall for the ignition switch issues despite the fact that the first reports of trouble were sounded as early as 2001.

The agency has nonetheless "been a lot more sensitive" to safety issues since former NHTSA Director David Strickland took a grilling on Capitol Hill over the leaked Toyota memo, suggests analyst Stephanie Brinley, of IHS Automotive. Numerous industry officials involved in safety issues say that there's far less of a collaborative atmosphere between automakers and automotive regulators compared to the approach taken during the industry-friendly Bush era.

Regulator, industry: Recall process working

But have things changed enough, especially in light of what the TREAD Act was meant to accomplish? NHTSA and the industry contend the process is working. While final figures for 2013 haven't been released, there has been a rise in recalls in recent years. Experts contend that shows fewer problems are slipping through the cracks, rather than a decline in vehicle quality.

That said, regulators also express concern that they aren't always able to get everything they need from the makers. Acting Administrator David Friedman has defended his agency's failure to push GM for an earlier ignition switch recall because, he contended, the maker failed to provide complete and "timely information."

One concern on the industry's side is that any apparent delays could create a perception the company was stonewalling and leave it vulnerable to fines—or be cited in lawsuits filed on behalf of those injured or killed due to product safety issues.

Critics like Clarence Ditlow, head of the Washington, D.C.-based Center for Auto Safety, aren't confident the recall process has improved in recent years. Ditlow is quick to point to two separate investigations involving Chrysler's Jeep brand. One led to the recall of about 1.4 million SUVs because of concerns their gas tanks could catch fire in the event of a rear-end collision. But that was barely half the 2.7 million Jeeps NHTSA originally targeted—and critics contended the "fix" was far from ideal.

Chrysler has continued to stand by its original position that there was no defect in the first place, insisting that, if anything, it decided not to continue resisting a recall because of the potential impact on its image. "Even if all the data shows we're right," the company said in a statement last June, "we're impacted by concerns about public opinion. This is an iconic brand and we have to consider this from a reputation standpoint."

Meanwhile, NHTSA last week ended another investigation into a reported fire risk involving the driver's side power master window switch on 104,000 older Jeep Liberty models. NHTSA said it scrubbed that investigation and others because there was not a "reasonable risk" to public safety.

(Read more: GM under mounting pressure to pay crash victims)

"That's not what the law says," argued Joan Claybrook, a former NHTSA administrator considered one of both the agency's and auto industry's harshest critics. "That's not the standard."

NHTSA and the industry contend not every possible problem can lead to a formal investigation—if for no other reason than there are simply too many reports of potential safety issues, most of which eventually prove not to be a real problem. If anything, increased media scrutiny, they counter, has led both industry and regulators to increasingly err in favor of action—even over minor issues with no actual reports of trouble in the field.

One of the three new GM recalls was discovered internally and involves a "non-compliant" plastic panel that covers the passenger airbag in Chevrolet Express and GMC Savana vans. Translation: the plastic is a little harder than it should be. There've been no actual crashes, injuries or even a single consumer complaint.

GM is going so far as to halt sales until it can replace the panel. Toyota took a similar step in January when it told dealers not to sell some of its most popular models, including the midsize Camry sedan, because a material used in heated seats was technically not in compliance with federal standards.

The maker decided to replace the fabric on vehicles in dealer lots─but has asked NHTSA to let it avoid recalling cars already sold to consumers. In the past, Toyota might simply have lobbied the agency privately. But today, even when it wants to get out of a recall it recognizes it's better to go public rather than look like it's trying to hide a potentially serious safety issue.

By CNBC Contributor Paul A. Eisenstein. Follow him on Twitter @DetroitBureau or at thedetroitbureau.com.

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