U.S. safety regulators have fined General Motors $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 $37.4 billion it took in during the first quarter.
"We know no one is perfect. But we cannot tolerate, what we will not accept, is that a person or a company who knows danger exists and says nothing. Literally, silence can kill,” said U.S. Secretary of Transportation Anthony Foxx. “The fact remains that GM did not act, and did not alert us in a timely manner. What GM did was break the law. They failed to meet their public safety obligations.”
--U.S. Secretary of Transportation Anthony Foxx
"GM did not protect Americans," said National Highway Traffic Safety Administration’s Acting Administrator David Friedman. "There is no such thing as an automaker overreacting to a safety defect."
As part of an agreement announced Friday by the Transportation Department and NHTSA, GM also has 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 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," said Transportation Secretary Anthony Foxx said in a statement.
The $35 million penalty was doubled from last year. But Foxx still urged Congress to pass legislation that would raise the fine to $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 $7,000 per day in early April after it missed the deadline.
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. Earlier this year it made Toyota pay $1.2 billion for concealing unintended acceleration problems from NHTSA.
Statement from GM:
General Motors Co. has come to an agreement with the National Highway Traffic Safety Administration (NHTSA) for failing to report in a timely manner the ignition switch defect.
As part of this agreement, GM will pay a $35 million fine.
“We have learned a great deal from this recall. We will now focus on the goal of becoming an industry leader in safety,” said GM CEO Mary Barra. “We will emerge from this situation a stronger company.”
Working with NHTSA, GM has already begun reviewing processes and policies to avoid future recalls of this nature.
“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. “Among other efforts, GM has created a new group, the Global Product Integrity unit, to innovate our safety oversight; we are encouraging and empowering our employees to raise their hands to address safety concerns through our Speak Up for Safety initiative, and we have set new requirements for our engineers to attain Black Belt certification through Design for Six Sigma.”
Having signed this agreement, GM now has its sights set on effectively serving customers and completing the ignition switch recall.
“GM’s ultimate goal is to create an exemplary process and produce the safest cars for our customers – they deserve no less,” said Barra.