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GM admits fault, pays $35 million for delaying fix in 2.6 million cars

Motoramic

U.S. auto safety regulators revealed a settlement with General Motors today over its delays in recalling 2.6 million vehicles with faulty ignitions that not only included a $35 million fine — the largest such penalty ever — but requires GM to open up its recall process to goverment scrutiny for years to come, an unprecdented step for an automaker.

In agreeing to the settlement with the U.S. Department of Transportation, GM admitted it delayed fixing ignitons that could sudden switch off in Chevy Cobalts, Saturn Ions and several other models, a problem linked to at least 13 deaths. GM has started fixing the vehicles after issuing its first recall in January, more than a decade after engineers first heard of compliants about the part.

“No excuse, process, or organizational structure will be allowed to stand in the way of any company meeting their obligation to quickly find and fix safety issues in a vehicle,” said David Friedman, the acting chief of the National Highway Traffic Safety Administration. “It’s critical to the safety of the driving public that manufacturers promptly report and remedy safety-related defects that have the potential to lead to deaths or injuries on our nation’s highways.”

“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 in a statement. “We will emerge from this situation a stronger company.”

In addition to the fine, GM agreed to:

— Share all results of its internal probe into why the recalls were delayed with NHTSA

— Pay an undisclosed amount of additional penalties for withholding information from the government.

GM admits fault, pays $35 million for delaying fix in 2.6 million cars

Slide from a GM presentation released by NHTSA

— Make "significant and wide-ranging" changes to how it finds defects and makes recalls. In the complete order, NHTSA attached an internal GM presentation from 2008 coaching employees in how to talk about problems without raising red flags that would get caught in lawsuits; instead of calling a flaw a "defect," engineers were instructed to use the phrase "does not perform to design." GM will now disavow such techniques.

— Increase efforts to notify owners of recalled vehicles about the safety issues that need to be fixed. Studies show automakers only complete repairs on 77 percent of the cars recalled.

Government officials said should GM violate any part of the agreement, they would be able to go immediately to federal court and seek a judge's order requiring GM's compliance. NHTSA will have monitoring on GM's safety procedures for at least a year, and can extend that oversight if agency officials see the need to do so.

The $35 million fine is the largest allowed for delaying a recall under federal law. NHTSA officials have asked Congress to raise the cap to $300 million, saying the limit's too low to truly deter multibillion-dollar corporations.

While the agency has fined other automakers for delaying recalls in the past, including Toyota and Ford, it has never put such conditions on settling an investigation. Since January, GM has recalled nearly 12 million vehicles worldwide in 25 separate campaigns; it also remains under investigation by the Department of Justice, and faces dozens of lawsuits over the delays.