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  • Oct 2, 2014
  • Updated: 1:54am

General Motors

General Motors (GM) is a US carmaker that was the world’s biggest, although Toyota is challenging it for the title. It was hard hit by the global financial crisis, needing a government bailout, but emerged from chapter 11 reorganisation in 2009, and held an initial public offering in 2010. It returned to profit in 2011.

NewsWorld
UNITED STATES

General Motors fined US$35m over delay in recall

PUBLISHED : Saturday, 17 May, 2014, 2:10am
UPDATED : Saturday, 17 May, 2014, 2:10am

US safety regulators have fined General Motors US$35 million for delays in recalling small cars with faulty ignition switches that are linked to at least 13 deaths.

It's the maximum penalty that the government can impose and the first time an automaker has been fined that much.

But the amount is less than a day's revenue for the automaker, based on the US$37.4 billion it took in during the first quarter.

As part of a deal announced yesterday by the Transportation Department and National Highway Traffic Safety Administration (NHTSA), GM also agreed to government oversight on safety issues, and to report safety problems much faster than in the past.

NHTSA has been investigating GM's delayed recall of older small cars with defective ignition switches. GM has acknowledged knowing about the problem for at least a decade, but it didn't start recalling the cars until February of this year. The company says at least 13 people have died in crashes linked to the problem, but lawyers suing the company say the death toll is at least 53.

"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," said Transportation Secretary Anthony Foxx.

The US$35 million penalty was doubled from last year. But Foxx still urged Congress to pass legislation that would raise the fine to US$300 million.

Automakers are required to report safety defects within five days of discovering them.

Ignition switches on Chevrolet Cobalts and Saturn Ions can slip out of the "run" position and shut off the engine.

That cuts off the power steering and brakes, potentially causing drivers to lose control. It also disables the car's air bags.

Under the agreement, GM will have to make "significant and wide-ranging internal changes" to its safety review process, the government said. The company also has to pay added penalties for failing to meet NHTSA's deadline to answer questions about the ignition switches.

NHTSA began fining GM US$7,000 per day in early April after it missed the deadline.

"We are working hard to improve our ability to identify and respond to safety issues," said Jeff Boyer, vice president of Global Vehicle Safety, who is assigned to integrate safety policies across the company.

In a separate statement announcing the agreement, GM CEO 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."

In addition to NHTSA, two congressional committees and the Justice Department also are investigating GM. The Justice Department could bring a much larger penalty and possible criminal charges.

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