As of early May, General Motors is now facing a $35 million fine as well as $10 billion dollars in civilian lawsuits due to accidents and fatalities resulting from a faulty ignition. Earlier this year, GM recalled 2.6 million cars equipped with the ignition but the National Highway Traffic Safety Association alleges that GM has known about the defect for the past thirteen years and tried to cover it up. These allegations have resulted in the $35 million dollar fine as well as 79 civil lawsuits from people affected by faulty ignition.
The defective ignition switch made it possible for the engine to inadvertently switch off causing the car to lose steering, breaking, and airbag capabilities. GM and NHTSA believe this glitch occurred when the car key was attached to an overloaded heavy keychain. Therefore, the two parties announced that, until they can be fixed, the recalled cars are safe to drive as long as drivers remove all other weight from their keychain. Presently, GM attributes 13 fatalities and 47 frontal-impact crashes to the defect however the NHTSA predicts the number of deaths to be closer to 50. This makes this one of the deadliest recalls in recent years since the Jeep Grand Cherokee recall of 2010.
As well as the aforementioned 2.6 million recalled cars, GM has issued 30 other recalls in 2014 totalling 13.8 million cars. This number is more than the total number of cars sold by GM since 2009 when they filed for Chapter 11 reorganization. Though, fortunately for GM, their stock has remained constant throughout this process despite the bad press.
In response to these recalls, GM has announced that they have appointed product chief Mark Reuss to head a new team of five executives that are tasked with determining if and when products will be recalled. Furthermore, GM has expanded their product investigation team in order to re-examine existing defect data and hopefully prevent anymore future accidents. GM also made an announcement warning investors to expect more recalls in the upcoming months.
In an interview last Thursday, Jeff Boyer, GM’s newly appointed safety global safety chief, stated:
“We recognized that we need to make some big changes – which we’re in the process of doing – in our overall recall process. When we determine a recall is necessary, we’re doing it very promptly, and I think you’re seeing very clear evidence of that.”