BREAKING: GM Acknowledges Slow Response To Ignition Flaw, Agrees To $35 Million Fine

May 16, 2014

General Motors has just published a statement confirming a groundbreaking agreement with the National Highway Traffic Safety Administration.

Per the terms of the agreement, GM admits that it failed to notify the agency in a timely manner about flaws associated with the automaker's "Switchgate" recall. GM will also pay NHTSA a $35 million fine, which is, according to NHTSA, "the single highest civil penalty amount ever paid as a result of a NHTSA investigation of violations stemming from a recall."

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And that's not all. NHTSA says that:

"[T]he agency also ordered GM to make significant and wide-ranging internal changes to its review of safety-related issues in the United States, and to improve its ability to take into account the possible consequences of potential safety-related defects. GM will also pay additional civil penalties for failing to respond on time to the agency's document demands during NHTSA's investigation."

Some of the internal changes to which GM has agreed involve giving NHTSA complete access to files associated with GM's internal investigation of ignition switch flaws. GM has also agreed to facilitate the process by which workers report safety problems to GM management and to speed up the internal review process that GM uses to determine whether or not to recall vehicles. The agreement also demands a great deal of transparency and customer outreach during the Switchgate recall.

GM is trying to make the best of the situation, using the agreement as a way to mark a new chapter in the company's history. CEO Mary Barra says that "We will now focus on the goal of becoming an industry leader in safety. We will emerge from this situation a stronger company."

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Meanwhile, NHTSA wants to use this agreement to generate Congressional support for the Department of Transportation's "GROW AMERICA Act". Among other things, the act would raise the cap on penalties like the one announced today from $35 million to $300 million.

Of course, today's agreement won't be the end of GM's troubles, either at the negotiating table or in court. GM is facing numerous lawsuits from consumers, and to the best of our knowledge, it's also being investigated by the Justice Department. We'll update you on those stories as they progress.

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