General Motors gets $35M fine over recall scandal

U.S. safety regulators have fined General Motors $35 million for delays in recalling small cars with faulty ignition switches that have been linked to at least 13 deaths, marking the first time the National Highway Traffic Safety Administration (NHTSA) has imposed the maximum penalty allowed by law against an automaker. 

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

As part of an agreement announced Friday by the Transportation Department and the NHTSA, GM has also agreed to government oversight on safety issues and to report safety problems much faster than in the past.

The NHTSA has been investigating GM's delayed recall of older small cars with defective ignition switches. GM has admitted to knowing about the problem for at least a decade, but it didn't start recalling the cars until February of this year. Automakers are required to report safety defects within five days of discovering them.

The problem was caused by ignition switches on Chevrolet Cobalts and Saturn Ions that were able to slip out of the "run" position and shut off the engine. That, in the process, cut off the power steering and brakes, potentially causing drivers to lose control. It also disabled the car's air bags.

The company says at least 13 people have died in crashes linked to the problem, but trial 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," Transportation Secretary Anthony Foxx said.

The NHTSA's $35 million maximum penalty was doubled from what the max was last year. But Foxx still urged Congress to pass legislation that would raise the fine to $300 million.

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 the NHTSA's deadline to answer questions about the ignition switches. The NHTSA began fining GM $7,000 per day in early April after it missed the deadline.

GM CEO Mary Barra said the company had “learned a great deal from this recall.”

“We will now focus on the goal of becoming an industry leader in safety. We will emerge from this situation a stronger company,” said Barra. “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 the NHTSA, two congressional committees and the Department of Justice (DOJ) are investigating GM. The DOJ could bring a much larger penalty and possible criminal charges. Earlier this year it made Toyota pay $1.2 billion for concealing unintended acceleration problems from the NHTSA.

"The big issue is what DOJ is going to do," said Clarence Ditlow, executive director of the Center for Auto Safety. "Not only should there be a billion-dollar-plus fine, but individual criminal prosecutions. People died. Justice demands more than a $35 million slap on the wrist to a hundred-billion-dollar corporation like GM when it kills consumers."

Al Jazeera and The Associated Press