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I concur, I have seen it dne this way as well. Carson is right, you need to do a bit of work to properly remove the connection for the ignition switch, then you need a new connector as well as the switch. Be sure to make a diagram of what wires went where on the connector before you take the connector apart, but you can do the drilling and remove the 3 screws before you do this, it'll be easier then. If you have access to a good mini-diegrinder yes you can use the deburring tool to grind off the small hardened steel locking pin, you neeed to remove the strap clamp to have access to it, what little access there is. I got pretty fast at getting the whole steering tube removed and working on it on the bench (prying out the whole part the lock fits in to instead of grinding off the lock pin). Do whichever you are comfortable with, but essentially these are your 2 options that I'm aware of.
So the list now looks like this:
Steering lock (you have in your lower picture)
Lock cylinder (has different names, it's the part the key fits in to). YES you can get one coded to the car NO problem, will come with a key or maybe 2, this key should work in the doors and trunk as well, same as Day 1. Dealer needs to order, will need proof of ownership (title or registration and your DL).
Ignition switch (recommend having it, may get busted removing the connector)
Black collar Carson mentioned (this is the part you see around the key hole)
Electrical connector pieces for the ignition switch, 2 pieces
May want to replace the shut-off valve, this is only on the diesel engine cars, or you can transfer the old one to the new lock.
Gilly
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