GM slapped with $900M fine due to ignition switch recall

GM slapped with $900M fine due to ignition switch recall image

Text: Marcus De Guzman / Photos: Chevrolet | posted September 18, 2015 12:06

US Attorney's Office slaps GM with a heavy fine over ongoing safety recall

General Motors (GM) will have to pay up a hefty fine after the US government slapped the auto giant with a staggering $900M fine due to their mishandling of the safety recall.

Settled in the form of a Deferred Prosecution Agreement with the US Attorney's Office for the Southern District of New York, it will require GM to cooperate with the federal government to review and assess the company's policies and actions on handling safety recalls. The $900M fine on the other hand serves as the million financial penalty.

Moreover, the US government will defer the prosecution of charges against GM for three years and will eventually dismiss the charges if GM satisfies all the terms of the agreement.

The additional agreements filed by the US Attorney's Office include:

  • Conducting a swift and robust internal investigation

  • Furnishing investigators with information and a continuous flow of unvarnished facts

  • Providing timely and meaningful cooperation more generally in the government’s investigation

  • Terminating wrongdoers

  • Establishing a full and independent victim compensation program that is expected to pay out more than $600 million in awards

“The mistakes that led to the ignition switch recall should never have happened. We have apologized and we do so again today. We have faced our issues with a clear determination to do the right thing both for the short term and the long term. I believe that our response has been unprecedented in terms of candor, cooperation, transparency and compassion,” said Mary Barra, GM CEO.

GM Chairman Theodore Solso on the other hand stated that the Board of Directiors immediately acted upon the issue and that automotive safety is one of their key priorities.

“GM’s Board of Directors took swift action to investigate the ignition switch issue and we have fully supported management’s efforts to regain the trust and confidence of customers and regulators, and to resolve the Justice Department’s investigation. GM’s Board and leadership recognize that safety is a foundational commitment, and the changes the company has made in the last 15 months have made it much stronger,” said Solso.

The Cadillac Deville model from 2000-2005

Last June 2014, GM recalled nearly 3.4 million vehicles that were fitted with the faulty component. Vehicles sold between 2000 and 2014 in the US, Canada and Mexico were affected by this and has since amounted to 20 million recalled vehicles.

According to GM, the ignition switch has a possibility of moving out of the 'Run' position if the key has extra weight (I.E. keychain). If it does happen, both the power steering and power braking of a vehicle will be affected while the airbags may not deploy in an event of a collision.

Models that were affected in the latest recall included: 2005-2009 Buick Lacrosse, 2006-2014 Chevrolet Impala, 2000-2005 Cadillac Deville, 2004-2011 Cadillac DTS, 2008-2011 Buick Lucerne, 2004-2005 Buick Regal LS & GS and 2006-2008 Chevrolet Monte Carlo.