GM 'Rocked' By "Record" DoT Penalty - Fined 0.02% of Revenue
$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:
- GM TO PAY UP TO $35M PENALTY ON COBALT PROBE, DOT SAYS
- DOT:CONSENT ORDER REQUIRE GM TO SUBMIT REPORTS, MEET W/ NHTSA
- DOT SAYS GM TO MAKE INTERNAL CHANGES TO REVIEW OF ISSUES
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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