CNBC got the story first this morning about the settlement of its ignition-switch defect, one that will include “a substantial fine.” The automaker had to issue a massive recall earlier this year after evidence emerged that GM hid the defect, and that also suggested that NHTSA shrugged it off while the federal government held a massive stake in the company:
General Motors has entered into a consent decree with the U.S. government over the timeliness of its ignition switch recall, CNBC has learned.
As part of the deal, the automaker will pay a fine. The Department of Transportation probe into the recall is expected to continue.
Details are still sketchy on the amount of the fine. The Detroit News reports that the maximum fine would be $35 million, which would be twice what Ford paid for a similar issue:
GM faces up to a $35 million fine under current law for failing to recall older Cobalt, Ion and other cars. Many officials have expected that GM will be forced to pay the maximum fine. If so, it would top the record-setting fines imposed on Toyota Motor Corp. and Ford Motor Co. for failing to recall vehicles in a timely fashion.
The Justice Department, two congressional committees and the Transportation Department’s inspector general are also reviewing the GM recall.
NHTSA decided in June not to publicize a large fine imposed on Ford Motor Co. for failing to recall more than 400,000 vehicles in a timely fashion after it had publicized the five previous fines issued to major automakers over recalls since 2010. The fine was posted on a government website but went unnoticed until the Wall Street Journal reported the news more than a month after Ford agreed to pay the fine.
Ford paid NHTSA a $17.35 million fine after the agency said the automaker did not notify customers of a defect in a timely manner after it recalled 423,000 2001-04 Ford Escapes and Mazda Tributes in July 2012, the maximum fine under current law. Ford did not admit any wrongdoing.
CBS reports that it’s $35 million. As the CNBC announcer said, even the maximum fine in this case would be a slap on the wrist — amounting to less than $4 per car.
The timing on this is … uncanny. One might even suspect that it was designed to overshadow the fact that GM just added another 2.7 million cars to its recall list for other issues, making it the biggest active domestic recall ever in the aggregate for the automaker:
General Motors Co (GM.N) said on Thursday it has issued five more recalls, covering almost 3 million vehicles globally, and is expected to take a charge of up to $200 million.
Still dealing with fallout from the recall of defective ignition switches linked to at least 13 deaths, the No. 1 U.S. automaker said the largest of the latest recalls covers more than 2.7 million cars for tail lamp malfunctions, including the Chevrolet Malibu, Pontiac G6 and Saturn Aura cars.
The other four recalls cover Malibu, Chevy Corvette sports cars, Cadillac CTS sedans and full-size trucks and SUVs. Most of the vehicles were sold in the United States.
GM said the new actions were a result of the sharper focus the company has put on safety issues following the recall earlier this year of 2.6 million vehicles for the faulty switch. So far this year, GM has recalled almost 12.8 million vehicles globally, easily topping the 9 million recalled in the previous five years combined.
The resolution of the DoT’s case against GM may mean less public pressure on the automaker, but they may not be the only beneficiaries of the settlement. The National Highway Transportation Safety Administration had plenty of knowledge that the GM vehicles had a significant defect. They took in far more complaints about the ignition switch and related airbag issues on GM vehicles than they did on Toyota vehicles with acceleration issues, and yet the government went to the mattresses with GM’s competitor and let GM off the hook. Was that decision influenced by the need to keep GM stock prices up so that the Obama administration could unload them — and defraud the investors who ended up buying them?
The DoT may be done with GM, but Congress should just be getting started with the NHTSA.
Addendum: Coincidentally, I’m in the market for a new vehicle. Not coincidentally, I’m not looking at GM products. That’s entirely based on quality ratings, not political considerations, though … which is kind of the point here, in the end.