GM fined $35 million for failure to report ignition switch defect

05/16/2014 4:42 PM

05/16/2014 6:32 PM

In what it called the single highest civil penalty resulting from an automobile recall, the U.S. Department of Transportation on Friday fined General Motors $35 million for the company’s failure to report a safety defect.

The defective ignition switch in the 2005-2010 Chevrolet Cobalt is blamed for 13 fatalities. Transportation Secretary Anthony Foxx, announcing the penalty, said that GM knew about the defect as early as 2009 but failed to report it.

“They told no one,” he said. “Crashes happened, and people died.”

But saying “our work doesn’t end here,” Foxx said that President Barack Obama’s four-year transportation proposal would increase the maximum fine to $300 million.

“These penalties should put all automakers on notice,” he said.

Federal law requires automakers to report safety defects within five days and immediately recall vehicles that are not in compliance with federal safety standards.

GM admitted to its failure to report the ignition switch defect in a consent order it signed with the National Highway Traffic Safety Administration. The order requires the company to change how it reviews and reports safety problems, and the provisions are enforceable in federal court.

David Friedman, the highway agency’s acting administrator, said that GM executives, engineers and lawyers knew about the defect but broke the law by not reporting it.

“There is no such thing as an automaker overreacting to a safety defect,” Friedman said.

Since February, GM has recalled more than 2 million vehicles over the defect, which could cause the vehicles’ airbags to not function in a crash. The families of three victims who were injured or killed in crashes tied to the defect filed a wrongful death lawsuit against GM in March.

Last month, Mary Barra, the company’s CEO, apologized to the families of the victims in a House of Representatives oversight hearing.

Congress and the Department of Justice are also investigating the circumstances behind GM’s handling of the safety defect.

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