General Motors slow recall results in $35 million fine

General Motors has come to an agreement set forth in a Consent Order signed by National Highway Traffic Safety Administration (NHTSA) in having failed to report its ignition switch defect at an appropriate time. GM admits in the Consent Order that it did not report on time. The agreement entails a $35 million fine.

General Motors CEO Mary Barra“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.”

General Motors is working with NHTSA in reviewing processes and policies to prevent a future recall of this type. “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.”

Upon signing the agreement, GM’s focus lays on its ignition switch recall completion. “GM’s ultimate goal is to create an exemplary process and produce the safest cars for our customers – they deserve no less,” said Barra.

The $35 million civil penalty is a result of NHTSA’s timeliness investigation in regards to the Chevrolet Cobalt and GM’s failure to report a safety defect in non-deployment of airbags in certain Chevrolet Cobalt and other GM models in a timely manner. This is single highest civil penalty ever paid in response to a NHTSA investigation of violations stemming from a recall.

This comes after Toyota Motor Corporation was fined $17.35 million at the end of 2012 when NHTSA ascertained that Toyota failed to report a safety defect in a timely manner. NHTSA has advised GM to make multiple internal changes to its review of safety-related issues in US, while working towards improving its ability to take into account possible consequences of potential safety-related defects. GM has to pay additional civil penalties in failing to respond on time to NHTSA document demands during investigation.

“Safety is our top priority, and 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 U.S. Transportation Secretary Foxx. “While we will continue to aggressively monitor GM’s efforts in this case, we also urge Congress to support our GROW AMERICA Act, which would increase the penalties we could levy in cases like this from $35 million to $300 million, sending an even stronger message that delays will not be tolerated.”

Auto manufacturers are required to notify NHTSA within 5 business days of determining if a safety-related defect exists or if a vehicle is not in compliance with federal motor vehicle safety standards in order to promptly conduct a recall. Provisions of the Consent Order are immediately enforceable in federal court if GM does not fully comply.

“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 NHTSA Acting Administrator David Friedman. “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.”

On February 7, 2014 General Motors announced a recall of certain model vehicles for a vehicle ignition switch defect that may unintentionally move out of the “run” position resulting in the air bag not deploying in the instance of a crash. GM has this year expanded the recall to include a total of 2,190,934 vehicles in the United States. This includes 2005-2010 Chevrolet Cobalt, 2007-2010 Pontiac G5, 2003-2007 Saturn Ion, 2006-2011 Chevrolet HHR, 2006-2010 Pontiac Solstice and 2007-2010 Saturn Sky vehicles.

In the last decade, NHTSA defect investigations have resulted in 1,299 recalls spanning 95 million vehicles and motor vehicle equipment and reduced vehicle fatalities. In the last 5 years, NHTSA has obtained record fines of $124.5 million.

General Motors ignition recallGeneral Motors has resorted to parts production running each day of the week on multiple shifts in order to produce enough repair parts by October to be able to repair the majority of vehicles affected by ignition switch and ignition cylinder recalls. GM and Delphi will get 2 additional production lines up and running this summer.

“Given that the ignition switch was in very limited production for several years, GM’s supplier, Delphi, increased production, pulled machinery out of storage, and found new suppliers for some of the part components,” wrote Jeff Boyer, vice president of GM Global Safety, today on GM FastLane. “We are buying new machinery and equipment to make parts quickly.”