8 • APRIL 7, 2014 GM RECALL

The mystery of the switch signoff

Mike Colias and Nick Bunkleymcolias@crain.com

midlevel General Motors engineernamed Ray DeGiorgio has emergedas the central figure in GM’s decade-long failure to fix a defective igni-

tion switch.In a Senate subcommittee hearing last week,

Sen. Claire McCaskill, D.-Mo., held up a copyof a document signed by DeGiorgio purport-edly showing that he authorized a redesign ofthe faulty switch on April 26, 2006. Seven yearslater, in a sworn deposition, DeGiorgio deniedhaving known anything about the change.

“He lied,” McCaskill said during GM CEOMary Barra’s appearance before the SenateCommerce Committee panel last week, with-out naming DeGiorgio.

Yet the one-page form that the senator heldup in front of Barra and a crush of TV camerasraises many more questions about how thatredesign was executed and who else mighthave had a say in it, accord-ing to three former high-level GM engineers who re-viewed the document.

The form signed by De-Giorgio is a “validation sign-off,” not the document thatwould have authorized apart redesign under GM’sprotocols, say the formerengineers, who didn’t workon the ignition system anddidn’t want to be identifieddiscussing internal company policy.

The document is an acknowledgment fromthe supplier, Delphi, that the part met thetechnical requirements that GM authorizedearlier, the sources say. It’s one element of amore rigorous process to execute a part re-design — referred to inside GM as an “engi-neering work order” — that would have in-

cluded input from at least a dozen peopleacross multiple GM departments, they say.

“That validation signoff is just one step at thevery end. It puts a bow around everything,”one of the former GM engineers told Automo-tive News. “By itself, it isn’t an authorizationby GM to change anything.”

The former GM engineers say the documentraises questions about whether a more exten-sive paper trail exists that would shed light onthe 2006 part redesign, which has emerged asa key turning point.

Research by Automotive News shows that atleast nine of the 13 deaths linked to the defec-tive switch happened after the redesign, whichfixed the problem of the switch’s flimsinessand was first used in 2007 model cars. Had GMrecalled the older cars at the time of the designchange, those victims likely would have hadthe chance to get their cars fixed.

A timeline submitted by the company to reg-

ulators in February says the “design engineerresponsible for the ignition switch ... signed adocument approving changes” to the part onApril 26, 2006.

The change apparently was made with suchscant documentation, including the failure toassign a new part number, that years later, GMengineers investigating crashes and com-plaints couldn’t figure out why the post-2006switches were different.

The redesign, and DeGiorgio’s role in it,drew close scrutiny last week from lawmakersduring separate House and Senate subcom-mittee hearings. At one point, Rep. SteveScalise, R-La., advised Barra to pull DeGiorgioaside and ask him: “Why did you approve achange in the ignition switch and not bring itto the level of recall?”

Yet DeGiorgio or any other engineer would

Ex-engineers: There’smore to the paper trail

on 2006 redesign

Expert: Out-of-spec parts can still be OKDavid Sedgwickdsedgwick@crain.com

Congressional eyebrows were raised onMarch 27 when Delphi Automotive told a con-gressional committee that General Motors hadaccepted a Delphi ignition component thatfailed to meet the automaker’s specs.

The part in question, a small spring, appliedinsufficient torque to hold the ignition key inthe “on” position if drivers accidentally nudgedit with their knees.

Why would an automaker knowingly accept apart that is out of spec?

“Just because a part is out of tolerance doesn’tmean that it’s the root cause of a failure,” saidScott Gray, a senior program manager for quali-ty at the Automotive Industry Action Group, anindustry research consortium in suburban De-troit.

But if the out-of-spec part “affects a compo-nent’s fit, form or function, that’s when you areexpected to do a full root-cause analysis,” Graysaid.

Standard procedureSources contacted for this report were unable

to indicate how often automakers use out-of-spec parts, but it happens frequently enough torequire a protocol.

Since 1993, the Detroit 3 have had a standardprocedure to evaluate out-of-spec parts. To per-form that analysis, engineers use two relevantdocuments: the Failure Mode Effects Analysisand the Production Part Approval Process.

The Failure Mode Effects Analysis can indi-

cate whether an out-of-spec part would workanyway, or whether it might suffer a cata-strophic failure. Engineers perform the analysisat the outset of a component’s development. Itcan tell what might go wrong if a part variesfrom the blueprints.

The Failure Mode Effects Analysis is used toevaluate all components, not just defectiveparts. But it can help engineers assess the con-sequences of using an out-of-spec part.

The Failure Mode Effects Analysis, part of anindustry standard developed by GM, Ford andChrysler in 1993, is a living document, Graysaid. That is, it is updated and revised as an au-

tomaker tests a component, redesigns it or re-ceives field reports of failures.

Once that analysis is completed and the partis designed, the supplier undergoes a Produc-tion Part Approval Process, another industrystandard developed by the Detroit 3.

A supplier performs a Production Part Ap-proval Process to show that it can properly pro-duce the component. It is serious business; au-tomakers won’t pay suppliers for tooling untilthey successfully complete it.

And if any changes are made — even seem-ingly trivial alterations of a component’s designor manufacture — the supplier must update itsProduction Part Approval Process, said one se-nior engineer who works for a GM supplier.

The engineer, who asked not to be named,told Automotive News that his company oncehad to get GM’s approval to move some pro-duction tooling 10 feet to a new location on thefactory floor.

Failure analysisIn sum, an automaker can accept out-of-spec

parts. A key document in the current crisis is the

Failure Mode Effects Analysis — that is, thecompany’s failure analysis — that might indi-cate whether GM knew in advance that an out-of-spec spring might cause a malfunction.

Company spokesman Greg Martin last weekdeclined to comment. “We look forward tosharing findings, as appropriate, once complet-ed,” Martin said. “Until then, we will provide nopreliminary comment.”c

BLOOMBERG

U.S. Sen. Claire McCaskill, D-Mo., holds a copy of a General Motors document signed by GMengineer Ray DeGiorgio that purportedly shows that DeGiorgio authorized a redesign of the faultyignition switch. The form, three former GM engineers say, would not have authorized a redesign.

A

DeGiorgio: Didhe authorizenew part?

see FORM, Page 59

This is an ignition switch on a 2003 Saturn Ion,one of the vehicles General Motors hasrecalled. The Detroit 3 have a standardprocedure to evaluate out-of-spec parts.

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APRIL 7, 2014 • 59

U.S. light-vehicle sales – continuedMarch March 3 mos. 3 mos.

2014 2013 2014 2013TESLA car*.............................................. 1,507 1,500 6,016 5,990

CT (I) ................................................................... 1,480 1,062 4,000 3,245ES (I) ................................................................... 6,784 6,798 15,103 16,801GS (I)................................................................... 2,484 1,882 5,358 4,089HS (I)................................................................... – 1 – 2IS (I) .................................................................... 4,893 2,255 11,458 5,173LFA (I) ................................................................. 2 4 4 9LS (I) ................................................................... 744 980 1,967 2,860

Total Lexus car (I).................................... 16,387 12,982 37,890 32,179GX (I)................................................................... 1,874 770 4,907 2,131LX (I) ................................................................... 389 366 1,056 1,026RX (D)............................................................... 7,684 7,909 14,781 18,071RX (I) ................................................................ 2,259 1,163 6,451 3,333

Total RX .............................................................. 9,943 9,072 21,232 21,404Total Lexus truck (D/I)............................... 12,206 10,208 27,195 24,561Lexus (D) .............................................. 7,684 7,909 14,781 18,071Lexus (I)................................................ 20,909 15,281 50,304 38,669Total Lexus ............................................ 28,593 23,190 65,085 56,740

FR-S (I) ............................................................... 1,464 1,828 3,425 4,640iQ (I) .................................................................... 259 383 591 1,009tC (I) .................................................................... 1,860 1,631 4,330 4,139xB (I) ................................................................... 1,534 1,778 4,057 4,557xD (I) ................................................................... 800 812 2,054 2,032

Total Scion car (I) .................................... 5,917 6,432 14,457 16,377Avalon ................................................................. 5,946 6,982 13,295 17,525Camry (D)......................................................... 41,942 37,648 94,258 100,787Camry (I) .......................................................... 11 15 25 43

Total Camry ........................................................ 41,953 37,663 94,283 100,830Corolla/Matrix (D)............................................. 29,672 31,380 77,680 80,088Corolla (I).......................................................... 13 43 57 156

Total Corolla/Matrix............................................ 29,685 31,423 77,737 80,244Prius (I)............................................................... 18,582 22,140 43,648 55,724Venza................................................................... 3,090 3,965 7,555 11,081Yaris (I) ............................................................... 1,805 2,393 4,144 7,335

Total Toyota Division car (D/I) ..................... 101,061 104,566 240,662 272,7394Runner (I) ......................................................... 7,062 4,609 15,682 13,073FJ Cruiser (I)....................................................... 1,484 764 3,912 3,351Highlander (D).................................................. 12,655 10,865 35,068 28,056Highlander (I) ................................................... 364 522 679 1,472

Total Highlander ................................................. 13,019 11,387 35,747 29,528Land Cruiser (I) .................................................. 287 247 772 740RAV4 (D) .......................................................... 14,136 10,480 39,635 26,890RAV4 (I)............................................................ 5,597 5,994 13,429 14,523

Total RAV4.......................................................... 19,733 16,474 53,064 41,413Sequoia ............................................................... 1,131 1,140 2,898 3,384Sienna ................................................................. 11,027 12,062 26,087 29,052Tacoma ............................................................... 14,445 15,201 35,229 39,467Tundra................................................................. 11,589 9,270 27,402 23,580

Total Toyota Division truck (D/I)................... 79,777 71,154 200,793 183,588Toyota Division (D) .................................. 145,633 138,993 359,107 359,910Toyota Division (I).................................... 35,205 36,727 82,348 96,417Total Toyota Division ................................ 180,838 175,720 441,455 456,327Total Toyota Motor Sales car ...................... 123,365 123,980 293,009 321,295Total Toyota Motor Sales truck .................... 91,983 81,362 227,988 208,149Toyota Motor Sales (D) ............................. 153,317 146,902 373,888 377,981Toyota Motor Sales (I)............................... 62,031 58,440 147,109 151,463

TOYOTA MOTOR SALES .............................. 215,348 205,342 520,997 529,444A3 (I) ................................................................... 300 120 863 743A4/S4 (I) ............................................................. 3,334 3,414 7,744 8,505A5/S5 (I) ............................................................. 1,536 1,628 3,491 4,001A6/S6 (I) ............................................................. 2,212 1,746 5,436 4,375A7/S7 (I) ............................................................. 854 797 2,106 2,083A8/S8 (I) ............................................................. 477 563 1,174 1,462R8 (I)................................................................... 74 68 225 167TT (I) ................................................................... 152 189 383 463

Total Audi car (I) ..................................... 8,939 8,525 21,422 21,799allroad (I) ............................................................ 358 537 943 1,290Q5 (I)................................................................... 3,357 3,099 8,774 8,196Q7 (I)................................................................... 1,592 1,092 4,089 2,901

Total Audi truck (I) ................................... 5,307 4,728 13,806 12,387Total Audi (I) .......................................... 14,246 13,253 35,228 34,186Bentley car (I)......................................... 280 206 650 574Lamborghini car (I)*................................. 59 57 177 171

Boxster (I)........................................................... 329 516 933 1,299911 Carrera/Carrera 4 (I) ................................... 887 990 2,535 2,722Cayman (I).......................................................... 288 61 922 63Panamera (I)....................................................... 442 411 1,466 1,384

Total Porsche car (I) ................................. 1,946 1,978 5,856 5,468Porsche Cayenne truck (I)........................... 1,862 1,508 4,280 4,181Total Porsche (I)...................................... 3,808 3,486 10,136 9,649

Beetle................................................................... 3,432 4,082 8,167 10,010CC (I)................................................................... 1,129 1,770 2,974 4,085Eos (I) ................................................................. 328 403 708 977Golf/Golf R/GTI (I) .............................................. 1,989 2,854 5,350 8,523Jetta..................................................................... 15,692 15,005 37,368 37,495Passat.................................................................. 11,050 9,521 24,283 25,909

Total VW division car (D/I) ......................... 33,620 33,635 78,850 86,999Routan ................................................................ 209 39 797 704Tiguan (I) ............................................................ 2,315 3,304 6,111 7,951Touareg (I).......................................................... 573 726 1,565 2,524

Total VW division truck (D/I) ....................... 3,097 4,069 8,473 11,179VW division (D)....................................... 30,383 28,647 70,615 74,118VW division (I)........................................ 6,334 9,057 16,708 24,060Total VW division .................................... 36,717 37,704 87,323 98,178Total VW Group car .................................. 44,844 44,401 106,955 115,011Total VW Group truck................................ 10,266 10,305 26,559 27,747VW Group (D) ......................................... 30,383 28,647 70,615 74,118VW Group (I) .......................................... 24,727 26,059 62,899 68,640

VW GROUP.............................................. 55,110 54,706 133,514 142,75830 series (I) ........................................................ 36 199 62 52260 series (I) ........................................................ 2,986 1,957 6,543 5,94770 series (I) ........................................................ 530 690 1,326 1,72080 series (I) ........................................................ 175 188 612 515

Total Volvo car (I) .................................... 3,727 3,034 8,543 8,704XC60 (I)............................................................... 1,701 1,690 3,789 4,752XC90 (I)............................................................... 487 641 1,366 1,651

Total Volvo truck (I).................................. 2,188 2,331 5,155 6,403VOLVO CARS N.A...................................... 5,915 5,365 13,698 15,107Domestic car...................................................... 563,365 573,288 1,360,740 1,444,379Import car .......................................................... 200,635 186,878 481,466 476,396

Total U.S. car ....................................... 764,000 760,166 1,842,206 1,920,775Domestic light truck .......................................... 662,358 589,155 1,628,773 1,510,796Import light truck............................................... 110,912 105,248 274,501 263,602

Total U.S. light truck .............................. 773,270 694,403 1,903,274 1,774,398Total domestic light vehicle .................... 1,225,723 1,162,443 2,989,513 2,955,175Total import light vehicle ....................... 311,547 292,126 755,967 739,998

TOTAL U.S. LIGHT VEHICLE ..................... 1,537,270 1,454,569 3,745,480 3,695,173

*Estimate†Fiat S.p.A. purchased the remaining 41.46% stake in Chrysler Group from the UAW’s

VEBA Trust on Jan. 20, 2014.

Note: (D) = produced in North America; (I) = imported to U.S.

Source: Automotive News Data Center and company sources

vice president of TrueCar.com. “Transaction prices are rising, so

dealers are still maintaining theirmargins despite the higher volume,”he said. “That’s a good balance.”

Analyst Alec Gutierrez of KelleyBlue Book believes the higherMarch incentives were a reason-able short-term response to workoff the weather-related bulge in in-ventories.

Automakers had a 76-day supplyof unsold vehicles March 1, about10 percent higher than industry av-erage for that date.

“There is a risk of pricing pressurein mid-sized cars” and other com-petitive segments the rest of theyear, Gutierrez said.

But after March, he is more com-fortable about the industry reach-ing Kelley Blue Book’s full-yearforecast of 16.3 million. In mid-March, Kelley was considering adownward revision if sales didn’tpick up.

Similarly, March restored Do-minique’s confidence in TrueCar’s16.1 million forecast for the fullyear. “But I’m concerned about

what kind of incentives it wouldtake for the industry to get muchmore than that above 16 million.”

Any 2014 sales growth must comeon the retail side. Daily rental fleetbuyers are keeping vehicles longerand strategically reducing replace-ment purchases.

Even including commercial andgovernment segments, first-quarterfleet sales fell 6 percent to 640,789units, according to industry sources.That’s just 17.1 percent of total vol-ume.

The Hyundai brand was the onlyone among the six players that con-trol 95 percent of U.S. fleet activitynot to reduce its reliance on fleet.Its fleet sales jumped 24 percent inthe first quarter, partially offsettingan 8 percent retail loss.

By contrast, the Detroit 3, ToyotaMotor Sales and Nissan North Amer-ica all reduced fleet as a percentageof their sales mix in the first quarter.

Not everybody shared in March’ssurge. Among the eight largest-sell-ing automakers, only two outper-formed the market. Chrysler Groupjumped 13 percent overall, ridingbest-ever sales months from Jeepand Fiat brands. Nissan NorthAmerica rose 8 percent as the Nis-san brand posted a record U.S.sales month.

American Honda lost sales inMarch, slipping 2 percent. That wasenough for Nissan to move past it totake the No. 5 sales ranking for themonth.

Five others increased sales, butless than the overall market. ToyotaMotor Sales rose 5 percent; GeneralMotors and Hyundai-Kia Automo-tive were up 4 percent; and FordMotor, 3 percent.

Volkswagen Group of Americagained 1 percent overall as strongperformances at Audi and Porscheoffset a 3 percent decline for the VWbrand.

But GM sales boss Kurt McNeilwas upbeat.

“GM’s retail sales, like the weath-er and the economy, have been onan improving trend since early Feb-ruary,” he said. “We expect to seesolid economic growth in themonths ahead.” c

Mark Rechtin contributed to this report.

continued from Page 4

SALESGrowth must comefrom the retail side

Fading fleet relianceFleet as percentage of totallight-vehicle sales

JAN.-MARCH JAN.-MARCH2014 2013

Ford Motor 30.5% 31.5%General Motors 24.6 25.9Chrysler Group 23.6 28.5Hyundai brand 20.1 15.7 Nissan N.A. 20.0 20.4Toyota Motor 10.5 13.9Industry 17.1 18.4Industry sources

PerspectiveHow the past 5 Marchs rankfor U.S. light-vehicle sales

1. 2014 1,537,2702. 2013 1,454,5693. 2012 1,404,7044. 2011 1,246,7045. 2010 1,066,298

Source: Automotive News Data Centerand company sources

Top 10 vehiclesMarch 2014

1. Ford F series 70,9402. Ram 42,5323. Chevrolet Silverado 42,2474. Toyota Camry 41,9535. Nissan Altima 35,9216. Honda Accord 33,9627. Ford Fusion 32,9638. Toyota Corolla/Matrix 29,6859. Ford Escape 28,701

10. Honda CR-V 28,657Source: Automotive News Data Centerand company sources

Top 10 vehicles3 months 2014

1. Ford F series 173,3582. Chevrolet Silverado 107,7573. Ram 96,9064. Toyota Camry 94,2835. Nissan Altima 89,2856. Honda Accord 79,1887. Toyota Corolla/Matrix 77,7378. Ford Fusion 77,5789. Ford Escape 71,305

10. Honda Civic 71,096Source: Automotive News Data Centerand company sources

have faced enormous hurdles topush a part redesign quietlythrough both GM and Delphi, theformer engineers say.

It would have been “unheard of,”the second former GM engineersays, for Delphi to have issued thatvalidation form signed by DeGior-gio without there having been anengineering work order authorizingthose changes.

That process would have requiredthe OK from DeGiorgio’s supervi-sor, from ranking engineers on sev-eral vehicle programs that share theswitch and from a team of engi-neers and purchasing and manu-facturing reps, the sources say.

Likewise, if a Delphi engineer hadquietly tried to push through achange without GM’s authorization“to hide a mistake,” the engineerwould have faced similar checksand balances within his company,the second engineer says.

Suspicions of perjury likely willdog DeGiorgio whether or not thedocument he signed representedan authorization. In his April 2013deposition, he says at least eight

times that he knew nothing aboutthe change to the switch.

Barra assured lawmakers that an-swers to the mystery surroundingthe redesign and other questionswould be forthcoming from an in-dependent probe commissionedby GM. But so far, GM has saidnothing that points to anyone be-sides DeGiorgio in the 2006 re-design.

Pressed by McCaskill at the Sen-ate subcommittee hearing onwhether DeGiorgio lied, Barra an-swered: “The data that’s been putin front of me indicates that.”

Barra said DeGiorgio is still em-ployed by GM, but the companyhas declined to make him availableto comment.

Other documents that surfacedamid the hearings last week rein-forced how seriously engineerswere considering the potentialtrouble with the now-recalled igni-tion switch.

A 2005 internal GM e-mail distrib-uted at the House subcommitteehearing referenced problems withthe ignition switches and indicateda sense of urgency on the part ofLori Queen, who was GM’s vehicleline executive for small cars at thetime.

“I’m not sure it’s OK to wait,”Queen wrote to 17 employees, in-cluding DeGiorgio, on Sept. 29,

2005.The document shows she was re-

sponding to the vehicle system en-gineer for the Chevrolet Cobalt,John Hendler, who said he was“very aware of an issue with ‘inad-vertent ignition offs’ due to the lowmounted ignition switch in thesteering column and the low effortsrequired to rotate the ignition.”

Hendler wrote that he wanted touse a “new, more robust, increasedeffort design” being developed forthe 2007 Chevrolet Equinox in theCobalt and Saturn Ion as well butthat others working on those vehi-cles thought the cost of doing sowas too high.

In her testimony last week, Barrasaid any analyses done that usedcost as a reason for not fixing a safe-ty issue were “inappropriate.” Shesaid GM used to have more of a“cost culture” when the recalled ve-hicles were developed.

Some GM officials were sayingsimilar things back then, as well.Queen, who is retired and has de-clined to comment on the recall,told Automotive News in a May 2004interview that GM wasn’t as con-cerned with pinching pennies onthe Cobalt as it had been while de-signing the Ion several years earlier.

Queen said: “The decisions forthat product were made in a differ-ent kind of environment.”c

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FORMChange would haveneeded more OKs

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