GM 'Rocked' By "Record" DoT Penalty - Fined 0.02% of Revenue

Tyler Durden's picture

$35 Million - that's what the Chevy Cobalt "ignition switch recall" probe fines cost GM based on The Department of Transport's maximum penalty... or 0.02% of their last 12 months revenues:


So the tax-payer bailed-out firm is paying the government a de minimus fine for killing taxpayers? (and the DoT now urges Congress to raise the maximum penalty to $300 million) Full statement below


Full DoT statement:

U.S. Department of Transportation Announces Record Fines, Unprecedented Oversight Requirements in GM Investigation

General Motors agrees to pay maximum $35 million penalty for violating federal safety laws in Chevrolet Cobalt investigation 

WASHINGTON – The U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) today announced that General Motors (GM) has agreed to pay a record $35 million civil penalty and to take part in unprecedented oversight requirements as a result of findings from NHTSA’s timeliness investigation regarding the Chevrolet Cobalt and the automaker’s failure to report a safety defect in the vehicle to the federal government in a timely manner. The defect resulted in the non-deployment of airbags in certain Chevrolet Cobalt and other GM models. This action represents the single highest civil penalty amount ever paid as a result of a NHTSA investigation of violations stemming from a recall.

As part of today’s agreement, set forth in a Consent Order signed with NHTSA, the 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.

“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.”

Federal law requires all auto manufacturers to notify NHTSA within five business days of determining that a safety-related defect exists or that a vehicle is not in compliance with federal motor vehicle safety standards and to promptly conduct a recall. GM admits in the Consent Order that it did not do so.

Today’s action is historic in that the provisions of the Consent Order will be immediately enforceable in federal court if GM does not fully comply.  The Consent Order will hold GM accountable, push the automaker to make needed institutional change, and ensure that replacement parts are produced quickly and recalled vehicles are repaired promptly.

“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.”

In the Consent Order, GM agreed to provide NHTSA with full access to the results of GM’s internal investigation into this recall, to take steps to ensure its employees report safety-related concerns to management, and to speed up the process for GM to decide whether to recall vehicles.

The Consent Order also requires GM to notify NHTSA of changes to its schedule for completing production of repair parts by October 4.  GM must also take steps to maximize the number of vehicle owners who bring in their vehicles for repair, including targeted outreach to non-English speakers, maintaining up-to-date information on its website, and engaging with vehicle owners through the media.  The Consent Order requires GM to submit reports and meet with NHTSA so that the agency may monitor the progress of GM’s recall and other actions required by the consent order.

Both in 2007 and again in 2010, NHTSA reviewed data related to the non-deployment of airbags in certain Chevy Cobalt models but each time, determined that it lacked the data necessary to open a formal investigation.  However, on February 7, 2014, GM announced it would recall certain model vehicles for a defect where the vehicle’s ignition switch may unintentionally move out of the “run” position that could result in the air bag not deploying in the event of a crash.  GM had failed to advise NHTSA of this defect at the time of the agency’s earlier reviews.

After review and consultation by NHTSA, GM twice expanded the recall to include a total of 2,190,934 vehicles in the United States.  The GM recall covers the 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.

Over the past ten years, NHTSA defect investigations resulted in 1,299 recalls involving more than 95 million vehicles and items of motor vehicle equipment, which has helped the agency to reduce vehicle fatalities to historic, all-time lows. Including today’s consent order, the agency has obtained record fines of $124.5 million in the last five years from automakers who have failed to promptly report defects to NHTSA.



And GM's gratious response...

“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.”


Working with NHTSA, GM has already begun reviewing processes and policies to avoid future recalls of this nature.


“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.”


Having signed this agreement, GM now has its sights set on effectively serving customers and completing the ignition switch recall.


“GM’s ultimate goal is to create an exemplary process and produce the safest cars for our customers – they deserve no less,” said Barra.

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Dr. Engali's picture

Is that a fine or a campaign contribution? 

666's picture

As GM stock goes from red to green on this news, I find it reassuring to know Congress and other gubmint insiders are making a fortune today.

knukles's picture

The govt ought to pay GM for all the stupendous due diligence prior to bankruptcy, legal advice and sterling management since.
Booyah, motherfuckers

Classic fucked up before, during and after, with the government

Welcome to the new GM

Beam Me Up Scotty's picture

What the left hand giveth, the right hand taketh away.

insanelysane's picture

You've gotta pay the fine and hire one of Biden's kids.

Bananamerican's picture

Cue NEW Bob Dylan commercial:
(Sings) "How many Cobalts...
does it take to ignite....
un-til GM's in bankruptcyyyyy?"

SDShack's picture

GM deserves to be forever known as Government Motors, and as such, the complete clusterfuk everyone knew it would be. Of course, it was on that course long before it was taken over by the govt, but would have been much better off if it had just filed for a simple bankruptcy and been bought out, broken up, or reorganized without all the govt. "help". Someone needs to post a picture of that backwards firing pistol that Tyler has used from time to time. Completely appropriate for today's GM.

Azannoth's picture

I bet you those 35Mil where the carefully calculated life-time projection of taxes for the people killed.

Bangin7GramRocks's picture

China would've already executed the executives. The U.S. has token fines. Why would any company worry about killing its customers? Read The Jungle by Upton Sinclair. That's what this country is reverting back to. So sad.

RaceToTheBottom's picture

"Is that a fine or a campaign contribution? "

Printed money recycling

ebworthen's picture

0.02% - Sounds about right, that's what Mom and Pop get paid on their savings.

auntiesocial's picture

Just add it to the national debt. no problemo. 

Seasmoke's picture

If GM runs the numbers....they will clearly see, they should just do it again. 

orangegeek's picture

DOT management bonuses!!!!  Get the booze and hookers.  Time to book conferences!!!

BrosephStiglitz's picture

How much was Toyota fined again?  Pretty sure it was more than 35 million.

flowlessflow's picture

Well the government need to cover their own "asset"

MontgomeryScott's picture

It has been scientifically established that Toyota's issue with the fly-by-wire accelerator pedal sensors was in fact due to the outlawing of normal solder (containing, OMG, LEAD) to attach the wiring together in mass-production facilities around the globe.

The substitute material seems to have a peculiar property of transferring physically when put in close proximity to opposite electrical current in D.C. (as opposed to A.C.), thus causing an effect much like 'electrochemical bonding'. The solder actually began to GROW tendrils, one point towards the other (and vica-versa) until it caused, in some cases, a short between the contacts (thus telling the engine control module that there was a demand for full throttle).

I 'KNOW' that lots of inner-city children like to lick lead paint off the walls in their houses (it happens all the time, they liked to tell us in the '70s).

I also know that lead acts as a shield against electromagnetic radiation, and is particulary useful for an octane booster (as well as having a cooling effect and a cushion on the contact areas of the exhaust valve/seat area on the Ottocycle engine; thus the reason for 'valve seat recession' being extremely prevelant after the United States banned its use in gasoline, and the 'dark time' when every major American manufacturer of automobiles began to struggle with warranty claims, before the advent of the incorporation of exotic, rare earth materials in the metallurgy, combined with the invention of the 'induction hardening process', which simply made the iron that the cylinder heads were made of to become brittle, and crack, thus effectively exaserbating an existing issue, because the EPA banned TETRAETHYL LEAD in gasoline, because inner-city kids ALWAYS lick the lead paint in their houses).


It was reported on the radio MSM news this day (16 May) that G.M. was fined 35 million dollars. It was ALSO stated that this is less than one day's 'revenues' for this company. Government Motors isn't squeeking much, and doesn't give a shit, because; after all, THEY don't build any of the parts used in production anymore. SEE, they just started ANOTHER 'unit' that will ensure that substandard parts usage will be COVERED UP EVEN BETTER than it already is.

It doesn't really matter to G.M., because they were 'bailed out' by the American public, and the fines are not REALLY going to be paid by them anyway. The 'consumer' and the 'taxpayer' will both share the burden (of BOTH the 'court costs' for the 'prosecution' by the 'government', and the actual transfer of the tax reciepts between agencies as well).

TOYOTA, however, isn't 'Merkun', and we went after THEM like a trial lawyer tailing an ambulance. ALL BECAUSE of a radical agenda that outlawed the use of LEAD in a simple thing like SOLDER.

On a sadder note, the E.P.A. is trying to get the use of LEAD banned in the manufacture of BULLETS, and has almost succeeded.

GEE, I wonder WHY.



Your welcome America. Here's some of your bailout $$ back. Sorry about the death penalties. 

SheepDog-One's picture

'America' gets the $? More like an indirect contribution straight to Hitlery's campaign coffers.

what's that smell's picture

it's all good.

there's a woman running the damn thing. what are you? sexist?

everybody knows you don't beat up on a girl.

i love the smell of facism in the morning!

pods's picture

Wow, with huge fines like this no one else will ever think about skirting the law again.


fonzannoon's picture

well at least the fines will go to the families of the victims.


BrosephStiglitz's picture

Yes, after legal fees, administrative costs and taxes, plus inflation.  Should be about enough for a Starbucks latte and a pack of smokes (provided they redeem it before "QE infinity squared" begins).

BrosephStiglitz's picture

Probably should have just made GM send the families a "Our condolences on decapitating your husband/wife/child" card.  With an electronic signature from the CEO and glitter.

flowlessflow's picture

No it won't. 1/3 went to all the Fat lawyers, 1/3 goes to "admin" who distrubute the money, "1/3" goes to government for tax!!!!

MontgomeryScott's picture

General Motors

Flint, MI.



     As you know, we here at G.M. are sympathetic to your claim that our outscourced parts caused the death of your loved one. We are saddened for your bereavement, and have added layers of protective bureaucracy to insure that our suppliers are not only living up to our tough standards of quality, but can also supply you with the BEST outscourced parts in your new Government Motors purchase in the coming years.

     Since we had to pay a substantial amount to our partners in the Public/Private partnership, we are unable to settle your claim at this time. However, please accept this coupon for a free Pizza and a Liter of Coca-Cola at your local Chuck E. Cheese, as a token to assuage your loss.




Sorry, we can only afford a one-topping medium at this time.


BrosephStiglitz's picture

Yep.  They'll be crying all the way to the bank.

CaptainSpaulding's picture

Hmmm, Taxpayer for 50 Alex

stant's picture

Maybe gm should sue the gov for mandating they build shitty cars

SheepDog-One's picture

Anyone lose their job oer it? Any criminal charges? Nah, just a small bribe payolla will do in the CONfidence game.

williambanzai7's picture

Isn't that how much one Potus round of golf costs?

MontgomeryScott's picture

Barry Hussein Soetoro wouldn't know, WB.

He's too busy 'procuring' a fully-armored heli-cart to allow him to play the links without worry.

Fly in, wave to the crowd of hand-picked military personnel dressed like 'civilians', take a Mulligan for the reporters, wave like he's actually important, and fly out...


Did you catch the pic where that thing he flies all over the world with him; the 'Beast', got high-centered trying to come out of the underground hotel parking lot in London? Damn thing got STUCK on the egress, teetering... funny as HELL!

flowlessflow's picture

Revenue doesn't mean anything.

Should used profit or at least EBITDA

dontgoforit's picture

The government fining GM is kind of like asking your wife to pay you for sex.

knukles's picture

Fuck that!
The goober mint ran the fucking place

youngman's picture

and I heard the ignition switch change saved them a $1 on each

knukles's picture

So whatshername was head engineer and now runs the place?
Glass ceilings Bitchez!

Get it, Bitchez?

MontgomeryScott's picture


When Mrs. Scott wants to service my engine's connecting rod, she does a wonderful job at it. She knows her place, and her engineering work is something to be experienced (D'ya ken?).

I NEVER call her a 'BITCH', though. That's much too crass, laddie.


The LASS you refer to wasn't given the whole length and breadth of the matter at hand (or isn't willing to deal with the true scale of the size of the issue). SHE's no 'head engineer'. She doesn't appreciate the position.

She simply needs to be trained to SWALLOW and TAKE IN the MAGNITUDE of what is in front of her; willingly accepting her current position.

D'ya think she'll need KNEEPADS, laddie?

what's that smell's picture

$1 x 35 million defective automobiles = $35 million dollar fine.


cowdiddly's picture

My sisters car is still waiting for 2months now for them to actually make the replacement ignition switch. All we hear are crickets.

MontgomeryScott's picture


As the lead mechanic and manager/owner at a repair shop here in the CONUS, and BEFORE this 'switch issue' was identified, I diagnosed and repaired a 2005 Chevy Cobalt with a 'bad ignition switch' issue. As I recall, the largest issue was NOT the electrical portion, or the lock tumbler, but the LOCK CYLINDER itself, which was built out of the crappiest stuff that you can use and still call 'metal'. Of course, the switch came apart, and this was due to attachment weakness (and general weakness of that SHIT POT-METAL that the boiz at G.M. call 'the aluminium lock cylinder housing').

They were sued because of 'ignition SWITCH failures', when, the root CAUSE was (and probably IS) completely DIFFERENT.

DAMN, that P.O.S. was built CHEAP! I couldn't BELIEVE that people actually BOUGHT this car in the first place, after messing with all the plastic CRAP and seeing the sub-standard materials that were used!

OOH, but it has 'cool' cupholders...



Tell your SISTER to grow up, and cut her losses. Try to find her a car that isn't made with cheap Chinese pot-metal and the worst engineering that was concieved in the history of automobiles. SELL that P.O.S., NOW!

medium giraffe's picture

'free market capitalism'.  ahhhhhhh hahahahahahahahahahaha.........