GM Fined $35 Million for Recall Delay

GM will pay the maximum $35 million fine to the United States Department of Transportation for delays in the recall of cars with defective ignition switches. The defect has been linked to 13 deaths and 32 crashes.

The fine is the highest civil penalty ever paid as a result of an investigation into recall problems by the National Highway Traffic Safety Administration (NHTSA). In a released statement, the Department of Transportation (DOT) said that the GM has also agreed to make “significant and wide-ranging internal changes” in how it monitors safety issues.

The DOT reported that GM will need to take part in unprecedented oversight requirements as a result of the findings form the NHTSA’s timeliness investigation regarding the Chevy Cobalt and the automakers’ failure to report a safety defect in a more timely manner.

Federal law requires that all auto manufacturers must notify the NHTSA within five business days of determining that a safety-related defect exists. GM admitted in the consent agreement that it did not do so.

In a press release, U.S. Transportation Secretary, Anthony Foxx said that the announcement of the fine “puts all manufacturers on notice that they will be held accountable if they fail to quickly report and address safety-related defects. He also encouraged Congress to support the Grow America Act, which would increase the penalties levied in a case like this from $35 million to $300 million, to send an even stronger message that delays will not be tolerated.”

According to the Washington Post, GM will also be required to pay additional penalties for not responding on time to demands from the NHTS for documents during the government’s investigation.

GM recalled 2.6 million Chevy Cobalts and other vehicles for a faulty ignition switch that could result in loss of power, causing loss of power steering and power brakes and non-deployment of airbags. GM first learned of a problem with the ignition in 2001 in the testing of a preproduction Saturn Ion.

The Justice Department, two congressional committees, and the Transportation Department’s inspector general are also reviewing the GM recall. The U.S. Securities and Exchange Commission and at least one state attorney general also are investigating GM.

GM must also take steps to maximize the number of vehicle owners who respond to recalls by bringing their vehicles in for repair.

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