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General Motors to Face Congress Committee Again - Analyst Blog

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General Motors Co. 's ( GM ) CEO Mary Barra will be meeting the U.S. Congress once more to answer questions about the delayed recall of 2.6 million vehicles with defective ignition switches. The meeting between Barra and the House Energy and Commerce Committee's oversight subcommittee is scheduled for Jun 18.

In early April, Barra had to face a congressional committee hearing due to the delayed recall. She revealed that the company is determined to resolve the issue without further delay. Although General Motors did not specify its modus operandi to deal with the situation, it intends to keep Congress in the loop about the actions that it is taking to resolve the issue.

Attorney Anton Valukas, who was hired by General Motors to conduct an investigation in to the matter, will be the only other witness before the House Oversight and Investigations Subcommittee. Last week, Valukas released a detail report of the investigation. In order to generate the report, Valukas investigated and undertook more than 350 interviews with over 230 individuals and went through more than 41 million documents.

Valukas generated a thorough and tough report that blamed the delay on poor decisions by some employees, including some engineers, who ignored the issue as they considered it to be a customer-convenience problem rather than a safety issue.

General Motors announced that it plans to act according to the recommendation of the report. Moreover the company will be prioritizing safety, quality and excellence together with compensating the victims.

After receiving Valukas' report, General Motors removed 15 employees who were senior legal and engineering executives, as they failed to identify the defect and acted inappropriately in relation to the recall. Moreover, the company took disciplinary action against 5 other employees. The automaker also plans to launch a program to compensate the crash victims and the affected families. Under this program, the automaker will be accepting claims from Aug 1.

In addition, General Motors undertook five strategies, the first being the appointment of Jeff Boyer as the vice president of Safety. Secondly, General Motors hired 35 safety investigators, to identify and address issues faster. Next, the company introduced the Speak Up for Safety program, under which employees are encouraged to report any potential safety issue. The company also created the new Global Product Integrity organization which will enhance the overall safety and quality performance. Lastly, the company restructured its decision-making process relating to safety issues.

Recently, General Motors also agreed to pay a fine of $35 million to the U.S. safety regulators due to the late recall. Earlier, automakers like Ford Motor Co. ( F ) and Toyota Motor Corp. ( TM ) have also been penalized for delayed recalls.

General Motors currently holds a Zacks Rank #3 (Hold). Fox Factory Holding Corp ( FOXF ), carrying a Zacks Rank #1 (Strong Buy), is a better-ranked automobile stock worth considering.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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