General Motors has agreed to pay a record $35 million (U.S.) civil penalty for its decade-long delay in recalling millions of small cars with fatal ignition switch defects, the U.S. highway safety regulator says.
The auto maker will also be subjected to “unprecedented oversight requirements” to ensure future safety issues are reported faster, the National Highway Safety Traffic Administration announced Friday.
“Safety is our top priority and today’s announcement puts all manufacturers on notice that they will be held accountable if they fail to quickly report and address safety-related defects,” U.S. transportation secretary Anthony Foxx said in a statement.
GM has admitted knowing for a decade about the problem in the Chevrolet Cobalt and other small cars and has recalled more than 2 million small cars, including 235,000 in Canada. The automaker has also said the problem is linked to crashes in which 13 people died, including a Canadian.
The faulty switch could inadvertently shift into the off or accessory positioning, shutting down the engine, power steering and brakes and airbags while the car was in motion.
In a separate statement announcing the agreement, GM chief executive officer Mary Barra said, “GM’s ultimate goal is to create an exemplary process and produce the safest cars for our customers — they deserve no less.”
The civil penalty is the most the traffic regulator can levy, but is a fraction of the $3.8 billion GM made in profit last year. GM will spend far more — $1.3 billion — fixing the defect.
The auto maker also faces a slew of lawsuits connected to the recall. The U.S. Justice Department, which recently reached a $1.2 billion U.S. criminal settlement with Toyota over a similar recall delay, is also investigating GM’s delay.
Clarence Ditlow, executive director of the non-profit Center for Auto Safety, wants the Justice Department to fine GM $1 billion or more and bring individual criminal charges against GM engineers and their superiors.
“That’s the only way you’re going to change GM’s behaviour,” he said.
Foxx urged Congress to support his Grow America Act, which would increase the civil penalties limit to $300 million, “sending an even stronger message that delays will not be tolerated.”
The highway safety regulator said it has ordered GM “to make significant and wide-ranging internal changes to its review of safety-related issues in the United States.”
“No excuse, process, or organizational structure will be allowed to stand in the way of any company meeting their obligation to quickly find and fix safety issues in a vehicle,” said NHTSA acting administrator David Friedman.
The order includes full access to the results of GM’s internal investigation into the ignition switch default. Since the recall was announced in February, GM has brought in a slew of high-profile experts to help it find out what went wrong, settle consumers’ claims, and repair its damaged image.
GM will also pay additional civil penalties for failing to respond on time to the agency’s document demands during the traffic safety regulator’s investigation.
Meanwhile, GM announced it’s recalling about 8,560 midsize cars in North America, including 209 in Canada, to fix a problem with the front brakes.
It’s the sixth recall announced by the company this week and the 24th this year. Since January, GM has recalled about 11.2 million cars and trucks.
The latest recall affects 2014 Buick Lacrosse and Chevrolet Malibu models.
Other automakers have also announced recalls, in some cases for fairly minor defects, saying they feel the need to be proactive in the current environment.
Concerning the latest recall, GM says in documents posted Friday by U.S. safety regulators that rear brake rotors were mistakenly installed on the front. The rear rotors are thinner, so brake pads will wear faster and could lose contact with the brake calipers. That could cause longer stopping distances and brake failure.
The company says it has no reports of crashes or injuries due to the problem.
Dealers were told to stop delivering the cars on May 1. Owners will get letters starting May 29. Dealers will inspect the brakes and replace rotors and pads if needed at no cost to owners.
- With files from Star wire services