General Motors said on Friday that it will pay the maximum $35 million fine to the U.S. Department of Transportation for delays in recalling 2003-2011 small cars with a potentially deadly ignition switch defect.
The fine is part of a consent agreement (full text below) with the DOT to settle its inquiry into whether GM notified the government within the required five business days after finding a safety defect. GM admits in the agreement that it did not.
GM will make "significant and wide-ranging internal changes" in how it monitors safety issues.
In addition, GM will give the DOT's National Highway Traffic Safety Administration "full access to the results of GM's internal investigation into this recall." Anton "Tony" Valukas, chairman of the Chicago-based law firm Jenner & Block and a former U.S. attorney, is conducting GM's internal probe.
GM will pay a fine of $7,000 per day – the maximum -- until it gives NHTSA the Valukas report, expected no later than June 30.
GM also will pay an additional amount for not meeting NHTSA's deadline for submitting documents concerning events leading to the recall.
The GM settlement "puts all manufacturers on notice that they will be held accountable if they fail to quickly report and address safety-related defects," said U.S. Transportation Secretary Anthony Foxx at a press conference about the agreement.
An industry expert says actions such as this already are having an effect. "Car companies in general are, and will be much more, rigorous about pre-introduction testing," says Jack Nerad, executive editorial director and senior analyst for Kelley Blue Book's KBB.com.
But Nerad says there also could be an unintended consequence. "Ironically, this climate might also curb innovation even in safety systems. The reason? Product liability.
GM told NHTSA Feb. 7 that it was recalling 619,122 of its 2005-2007 Chevrolet Cobalt and 2007 Pontiac G5 small cars. On Feb. 25 it expanded the recall by 748,024 vehicles to include: 2006-2007 Chevy HHR and Pontiac Solstice, 2003-2007 Saturn Ion, 2007 Saturn Skye.
GM documents show that it knew in 2001 there could be a problem with the key that unexpectedly shut off the engine, killed power assist to the steering and brakes and usually disabled airbags.
Two high-ranking engineers with links to the switches recently retired from GM and two others were put on paid leave.
In a statement on Friday GM said: "We have 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."
edited from USA Today and AP
