NHTSA Fines GM a Paltry $35 Million for Ignition Switch Fiasco

Current GM CEO Marry Barra speaking to the Automotive Press Association at the Detroit Athletic Club when she was heading GM’s product development. Back then, Barra said she spent much of her time seeking and executing efficiencies in the way GM develops products.

The U.S. Department of Transportation’s National Highway Traffic Safety Administration, NHTSA, today said that General Motors (GM) would pay a $35 million civil penalty for violating federal safety laws for not recalling the Chevrolet Cobalt for defective ignition switches.

The paltry fine is the maximum amount allowable under U.S. regulations, a pittance according to critics who have long decried such penalties as insignificant to auto companies with billions of dollars in revenues. GM net revenue in Q1 of 2014 was $37.4 billion, compared to $36.9 billion in the first quarter of 2013. General Motors dealers sold 2,416,028 vehicles globally during Q1.

Nevertheless, the $35 million is a record fine, and GM will pay additional civil penalties for failing to respond on time to the agency’s document demands during NHTSA’s investigation, NHTSA said in a statement.

GM also faces billions in criminal penalties. Recently, Toyota Motor agreed to pay a $1.2 billion fine in a controversial plea agreement with the U.S. Department of Justice whereby Toyota Motor Corporation admits to lying to consumers and U.S. safety regulators about unintended acceleration in its cars during the fall of 2009 and early 2010 by issuing “misleading statements” about safety issues in Toyota and Lexus vehicles. (Toyota Motor Guilty of Criminal Fraud. Cops $1.2 Billion Plea)

“In entering a consent agreement with GM over the ignition switch defect, DOT did the most that it could do under the Safety Act – impose a $35 million fine and require GM to have a system in place to ensure compliance with the recall provisions of the Act, said Clarence Ditlow of the Center for auto Safety. “Congress should untie DOT’s hands and make violation of all provisions of the Safety Act criminal plus uncap civil penalties. The big issue is what is the Department of Justice going to do? The Center for Auto Safety calls on the Justice Department to impose a billion dollar plus fine on GM and bring individual criminal prosecutions against the responsible GM officials. People died.”

GM not surprisingly issue is own statement. “We have learned a great deal from this recall. We will now focus on the goal of becoming an industry leader in safety,” according to GM CEO Mary Barra. “We will emerge from this situation a stronger company.” (But not financially stronger – editor)

General Motors claims it will have enough parts from former in-house supplier Delphi by October to repair the majority of the vehicles covered by the ignition switch and ignition cylinder recalls.

The cars covered are model years:

• 2003-2007 Saturn Ion
• 2005-2010 Chevrolet Cobalt
• 2007-2010 Pontiac G5
• 2006-2010 Pontiac Solstice
• 2007-2010 Saturn Sky
• 2006-2011 Chevrolet HHR

Owners of these vehicles should contact their dealer or go to www.GMIgnitionUpdate.com to start their parts request.