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GM Recall Effort Leads to $900m Fine | DrivingSales News

GM Fined $900 Million For Concealing Ignition Switch Defect

September 18, 2015 0 Comments

General Motors has been fined $900 million – yes, that’s $900 million in response to their long lasting recall effort. GM will have to pay $900 million in fines as part of a deferred prosecutions agreement with the U.S. Department of Justice. General Motors is being punished for their handing of the ignition switch recall effort.

The Justice Department feels that between 2012 and 2014 the automaker hid this defect. According to a Department of Justice press release, “GM is charged with concealing a potentially deadly safety defect from its U.S. regulator, the National Highway Traffic Safety Administration (NHTSA), from the spring of 2012 through February 2014, and, in the process, misleading consumers concerning the safety of certain of GM’s cars.”

General Motors has already taken both financial and public image hits over this recall that has been linked to accidents in which 169 people died. The financial toll of GM’s ignition switch recall has reached $2.13 billion. According to the International Business Times, this total includes the $900 million sought by the Department of Justice, the $625 million from the GM victim compensation fund, $525 million for civil settlements for shareholder and personal injury, $35 million in 2014 from a NHTSA fine.

Anthony Foxx, the U.S. transportation secretary spoke about the latest $900 million fine for GM in a statement saying, “General Motors not only failed to disclose this deadly defect, but as the Department of Justice investigation shows, it actively concealed the truth from NHTSA and the public. Today’s announcement sends a message to manufacturers: deception and delay are unacceptable, and the price for engaging in such behavior is high.” According to CNN, GM CEO, Mary Barra, weighed in on the ignition switch issue on Sept. 17. Speaking to GM employees Barra said, “People were hurt and people died in our cars. That’s why we’re here today.”

If 2014 was the year of the recall, 2015 is shaping up to be the year of the automaker fine. Thus far in 2015, Honda has been fined $70 million, FCA $105 million and now GM $900 million. Do you think that these fines are all justified for illicit actions, or are regulators overdoing it? At the dealer level are you concerned that increased automaker fines could mean higher prices and less sales?

About the Author:

The DrivingSales News team is dedicated to breaking the relevant and the tough stories affecting car dealers. Have questions for DrivingSales News? Reach the team at news@drivingsales.com.

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