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GM to offer loaner cars, cash to small-car owners

By Tom Krisher
AP Auto Writer

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DETROIT: General Motors is offering free loaner cars and $500 toward a new GM vehicle to more than a million owners of compact cars that are being recalled for a deadly ignition switch defect.

But the owners have to ask in order to get the benefits.

The offers, disclosed in a document posted Wednesday on the National Highway Traffic Safety Administration’s website, are effective immediately. Owners will be able to use the loaner cars until parts arrive at dealerships to replace the faulty switches. They are expected around April 7, GM said.

The $500 cash allowance offer runs through April 30.

GM last month announced the recall of 1.6 million older small cars worldwide because faulty ignitions can shut off engines unexpectedly. If the engines shut off, drivers can lose power steering and power brakes, and the air bags may not inflate if there’s a crash.

GM now counts 12 people as having died in crashes linked to the problem. The company said Wednesday that one victim had been double-counted.

GM is facing a Department of Justice investigation, as well as investigations from two congressional committees and federal safety regulators over its handling of the recall. The company has admitted that it knew about the problem a decade ago.

Committees in the House and Senate also want to know why the government’s road safety watchdog, the National Highway Traffic Safety Administration, didn’t take action sooner.

The loaner/rebate program is part of GM’s damage control efforts. Last week, CEO Mary Barra promised that an internal review would bring improvements and prevent similar problems in the future. She also said current management is intent on “taking great care of our customers and showing that it really is a new day at GM.”

On Feb. 13, GM announced the recall of more than 780,000 Cobalts and Pontiac G5s (model years 2005-2007). Two weeks later it added 842,000 Saturn Ion compacts (2003-2007), and Chevrolet HHR SUVs and Pontiac Solstice and Saturn Sky sports cars (2006-2007).

In the document disclosed Wednesday, GM tells dealers that in situations where an owner is concerned about driving their car and asks for a loaner, service managers can give them one until repair parts arrive.

Dealers are also instructed to tell owners who ask that GM isn’t offering to buy back their car. But the company will offer the owners cash toward buying or leasing a new Chevrolet, Buick, GMC or Cadillac vehicle.

The allowance “is intended to assist those customers who are unhappy and may want to trade out of their vehicle,” the document said. “This special cash allowance is not a sales tool.”

GM says a heavy key ring or jarring from rough roads can cause the ignition switch to move out of the run position. The company is urging people not to put anything on their key rings until the switches are replaced.

Shares of GM have fallen 7.3 percent this week amid word of new investigations. The stock fell 24 cents, or 0.7 percent, to $34.94 in late-day trading Wednesday.


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