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GM's CEO to face more Capitol Hill grilling over safety crisis

General Motors Chief Executive Mary Barra is returning to Capitol Hill on Wednesday to face intense questioning about whether the automaker has a grip on the safety crisis that has enveloped it this year, as recalls connected to ignition-switch issues continue to grow.

The No. 1 U.S. automaker has come under fire from the Justice Department, lawmakers and other authorities probing why it waited more than a decade to recall 2.6 million cars with an ignition-switch flaw that has been tied to at least 13 deaths.

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Barra's latest turn in the congressional hot seat comes just days after GM recalled more than 3 million additional vehicles that apparently suffer from a separate ignition defect.

GM has not tied any fatalities to that defect.

General Motors CEO Mary Barra briefs the news media at the General Motors annual shareholder's meeting at GM world headquarters June 10, 2014 in Detroit.
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General Motors CEO Mary Barra briefs the news media at the General Motors annual shareholder's meeting at GM world headquarters June 10, 2014 in Detroit.

The automaker has portrayed the additional recalls as the product of its thorough review of all safety issues since the ignition-switch recalls were first announced in February.

But lawmakers last week immediately pounced on the mounting recalls as potential evidence of bigger safety problems at GM.

For the hearing on Wednesday, House Energy and Commerce Committee Chairman Fred Upton said he wants "straight and honest answers" about what got the company into the mess and how GM is fixing it.

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"GM's work to restore drivers' confidence is far from over," Upton said in a statement to Reuters.

GM has issued 44 recalls this year totaling about 20 million vehicles worldwide, which is more than total annual U.S. vehicle sales. Of the recalls this year, nearly 6.5 million of the vehicles were recalled for ignition switch-related issues, including more than half a million Chevrolet Camaros on Friday.

The ignition-switch problems can cause the cars to stall during operation. Because of the engine stalls, air bags failed to deploy during crashes—some of them fatal—and drivers had difficulty operating their vehicles because power steering and brake systems also malfunctioned.

Analysts said they are expecting lawmakers to give Barra rough treatment on Wednesday.

"I don't expect it to be a cakewalk," said Michelle Krebs, a senior analyst with AutoTrader.com. "I think there will be increased questions about how safe all of the vehicles are in light of all these recalls."

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GM plans to address the ignition switch issue in the 3 million cars recalled this week by replacing or modifying keys to eliminate a slot in the end of the key. The slot allows a dangling key ring to slip to one side and pull the ignition key out of the run position.

A spokesman said the ignition switches did not need to be replaced, even though they were "slightly" below the company specification for torque—the force needed to move the switch out of the run position.

A better, if more costly solution would be to "change the ignition system to a more robust design," said Sandy Munro, owner of a Detroit-area engineering consulting firm that does work for both automakers and the U.S. government.

Munro described the key fix as "cheap, quick and temporary."

Barra, in her prepared testimony which was made public on Tuesday, said GM is addressing any and all safety concerns. She also said the company is committed to change.

"I want this terrible experience permanently etched in our collective memories. This is a tragic problem that never should have happened. And it must never happen again."

Barra will appear with Anton Valukas, the GM-hired investigator who delivered a report earlier this month that spared top executives and pinned blame on lower-level engineers and lawyers.

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The report said those employees either did not appreciate the danger of the flaw or did not share the risk with their superiors.

GM and Barra have so far weathered the scandal with few signs of permanent damage. The automaker's May U.S. sales were up 12.6 percent from the prior year, well above analyst expectations, and its share price is slightly stronger than just before the announcement of the first ignition-related recall on Feb. 13.

Brian Johnson, analyst at Barclays Capital, said he is viewing the recently announced recalls as the result of a "deep-dive catch-up" on safety issues, including many minor ones.

He said Barra will need to show on Wednesday that GM is aggressively pursuing organizational and cultural changes.

"They need to communicate to Congress that they've done a thorough job, and to Wall Street that most of these major recalls are behind them."

By Reuters

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