Will the Government Rescue GM Again?

For more than four years, General Motors struggled to shed the loser image of a corporation that needed a $50 billion taxpayer bailout in 2009 to survive a self-inflicted near-death experience. Now, in the wake of a February recall of 1.6 million Chevrolet Cobalts and other discontinued models, GM’s much-derided status as “Government Motors” has unlikely appeal. Company lawyers are counting on its 2009 bankruptcy arrangements as a bulwark against litigation that grows more ominous by the day following GM’s admission that it knew of faulty ignition switches more than a decade ago and failed to fix the problem.

Whether or not the GM legal strategy holds up, the recall mess has revived the company’s reputation for unreliability and created a crisis for Mary Barra, its new chief executive officer and the first woman to lead a major auto manufacturer. The carmaker took a $300 million charge in its first quarter for various recalls, including a new one announced on March 17, covering 1.55 million newer models such as Buick Enclaves and GMC Acadias that have faulty air bags and Cadillac XTS sedans with brake flaws that may result in overheating or engine fires. The company also named GM veteran Jeff Boyer to the newly created position of vice president of global vehicle safety. Detroit has had better months.