General Motors has been hit with a record-setting $35 million penalty as a result of the recall of 2.6 million cars with faulty ignition switches. The switch issue was linked to 13 deaths and 32 crashes, and GM had been accused of not acting quickly enough to report the flaw or order a recall.
The National Highway Traffic Safety Administration has "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.” They will also push GM to "make needed institutional change, and ensure that replacement parts are produced quickly and recalled vehicles are repaired promptly.”
Transportation Secretary Anthony Foxx, who initially urged drivers to keep using the recalled vehicles until they could be fixed, has changed his tune. “Safety is our top priority," he said, "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."
While $35 million may seem like a hefty fine, GM reported a net income of $100 million in the first quarter of 2014. However, $35 million is the maximum fine currently allowed under law, but the Obama administration is pushing to increase the penalty to $300 million.
GM has already appointed a new safety chief and CEO Mary Barra has said, "We will now focus on the goal of becoming an industry leader in safety. We will emerge from this situation a stronger company.”
At time of publishing, GM stock was up 0.15 percent for the day, though down from the height of the week (currently trading at 34.38 from Tuesday's peak of 35.18.)
This article is from the archive of our partner The Wire.
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