GM Pays Record $35 Million Fine over Fatal Ignition Switches

May 16, 2014 04:42 PM EDT | Jordan Ecarma


General Motors has agreed to pay a $35 million settlement to the government following a federal investigation into millions of recalled small cars, the maximum fine allowable under law.

The record fine serves as a warning to other carmakers as well, an official said.

"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 Transportation Secretary Anthony Foxx, as quoted by The New York Times.

In the wake of the recall, GM has shuffled its executive team and also added 35 product inspectors and restructured its engineering division.

While the settlement reaches the current limit on such fines, regulators have been campaigning to increase the maximum fine to $300 million.

Headed by recently appointed CEO Mary Barra, the automaker is aiming for a clean slate after the ignition switch recall fiasco that resulted in 13 deaths, and the "new GM" is coming at a steep price.

In addition to the $35 million fine and $1.3 billion in recall expenses, GM is paying $7,000 a day for insufficiently answering 107 questions from regulators about 2.6 million recalled small cars. Chevrolet Cobalts, Saturn Ions and other models had problematic ignition switches that tended to turn off the cars while driving, shutting down the engine and disabling the airbags.

"We have learned a great deal from this recall," G.M.'s chief executive, Mary T. Barra, said Friday in a statement quoted by the Times. "We will now focus on the goal of becoming an industry leader in safety. We will emerge from this situation a stronger company."

Federal regulators say that GM knew about the ignition switch issue two years ago but neglected to act.

A GM engineer sent an internal email back in 2012 that pointed out the connection between the faulty switches and airbag failure, David Friedman, acting administrator of the National Highway Traffic Safety Administration, said at a news conference on Friday.

"G.M. engineers knew about the defect, G.M. investigators knew about the defect, G.M. lawyers knew about the defect," said Friedman, as quoted by the Times.

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