General Motors Co. will pay out as much as $150 million to owners of vehicles that are being recalled because it can't fix a flaw in the system that squirts heated cleaning fluid on the windshield.
In one of the largest recalls this year, GM said Tuesday that it was recalling about 1.5 million vehicles, including certain Cadillac and Buick sedans as well as several sport utility vehicles, because the problem could cause the vehicles to catch on fire. The recall of many 2006 to 2009 model-year vehicles will involve disabling the heating mechanism and paying $100 to the owner.
Analysts said the move by GM represented both the speed and willingness of large automakers to make amends with customers after the recent public relations debacle experienced by Toyota Motor Corp. over a series of large recalls and quality issues.
"This should be more common," said Clarence Ditlow, executive director of the Center for Auto Safety.
There have been previous instances in which manufacturers paid customers because something on a vehicle did not work, but Ditlow said he could not remember another case that was part of a safety recall.
"Manufacturers are saying, 'There but the for the grace of the God go I, so let's do this correctly and maybe we will avoid the image problems of Toyota,'" Ditlow said.
In addition to facing more than 200 federal lawsuits over alleged sudden-acceleration problems, Toyota has also seen its market share slide in the U.S. In May, a month when most automakers posted double-digit sales gains, Toyota's sales rose only 6.7%. Through the first five months of this year the Japanese automaker's U.S. market share has dropped to 15.2%, compared with 16.2% during the same period a year earlier.
GM was being smart by offering customers the money, Ditlow said. It was likely that a class-action attorney would step in and file a lawsuit against GM on behalf of owners whose vehicles have the defective system and the automaker would have been forced to pay some form of compensation, he said.
The final tab for GM may not reach $150 million.
"It is unlikely that all customers will come in to have the system deactivated," said Alan Adler, a GM spokesman. "Typical safety recall completion after 18 months is around 80%."
The malfunction has not caused any known injuries or crashes but does present a fire hazard, according to the National Highway Traffic Safety Administration.
"While our analysis shows the number of incidents is very small compared with the number of vehicles on the road, we want our customers to have complete peace of mind," said Jeff Boyer, GM's safety chief.
Dealership mechanics will remove the device that heats the washer fluid and reroute the hose. GM said customers would begin receiving recall letters this month, but they could contact their dealers now and make an appointment to have the heated washer system removed.
"This was a unique technology available from only one supplier, and that supplier has stopped manufacturing, which left no opportunity to collaborate on an improved design," Boyer said.
Michelle Krebs, an analyst with auto information company Edmunds.com, said GM found itself in a "very unusual situation" compounded by what she called the "Toyota syndrome" atmosphere.
"They put a new technology on a vehicle. The company went bankrupt and they have no way to repair it. That's a risk of being the first adapter of a new technology," Krebs said.
The models included in the recall are the 2006-09 model-year Buick Lucerne; Cadillac DTS; Hummer H2; 2008-09 model-year Buick Enclave; Cadillac CTS; 2007-09 model-year Cadillac Escalade, Escalade ESV, Escalade EXT; Chevrolet Avalanche, Silverado, Suburban, Tahoe; GMC Acadia, Sierra, Yukon, Yukon XL; Saturn Outlook; and 2009 model-year Chevrolet Traverse.
GM said almost 1.4 million of the vehicles are in the United States, with nearly all of the rest in Canada and Mexico.
The same system was recalled two years ago because a short circuit on the printed circuit board could overheat the control-circuit ground wire. Dealers at the time installed an in-line fuse in the heated washer module wiring. But GM said there were still reports of overheating incidents, including five fires.