DOJ Investigates GM Recall Delays, Criminal Negligence

Consumer protection, News

General Motors (GM) is facing several investigations regarding its role in the recent recall of over 1.6 million defective cars. The investigations will determine, among other things, whether the car manufacturer is criminally negligent and should have recalled cars sooner. Faulty ignition switches are responsible for at least 12 deaths and 31 crashes to date. GM did not issue a recall until last month, despite knowing about the problem since 2004.

GM Faces Multiple Investigations

In addition to its own internal investigation, GM can expect several investigations from various governmental bodies.

The National Highway Traffic Safety Administration (NHTSA) sent GM a notice of preliminary investigation earlier this month. If the NHTSA discovers that GM did not report the safety defect to the agency in a timely fashion (within 5 business days of the discovery), it can impose a $35 million fine. The watchdog agency is itself under scrutiny for its role, as critics wonder why it didn’t act earlier. Car manufacturers are required to file death reports when their vehicles are involved in fatal accidents, and GM had filed 51 such reports since 2004. NHTSA Acting Administrator David Friedman says they did not receive adequate information to insist on a recall.

The Department of Justice will open an investigation to determine whether GM is legally liable for the accidents that occurred as a result of the late recall. However, because of the nature of the company’s 2009 government bailout, it may be shielded from liability.

The U.S. House Energy and Commerce Committee will soon launch an investigation into the same issue. The goal is to determine if something more could have been done, and if so, how to implement that for the future. The Senate will launch an investigation, too. Sen. Claire McCaskill (D-MO), chair of the Consumer Protection Subcommittee, plans to hold hearings regarding GM’s delay in recalling its cars.

Fatalities from Faulty Ignition Switches

Ignition switches in the 2005-2007 Chevrolet Cobalt, 2006-2007 Chevrolet HHR, 2003-2007 Saturn Ion, 2007 Pontiac G5, and 2006-2007 Pontiac Solstice were known to be problematic as early as 2004. The defect involved the ignition turning off despite the keys being in it, cutting power to the airbags, power-assisted steering, and power-assisted brakes. The failure of airbags to inflate is implicated in the fatal crashes.

GM had sent out a warning about the ignition problem but did not officially recall any cars until February. Repairs on the recalled cars will begin in April at an expected cost of $300 million to the company.

GM to Cooperate; Issued New Recalls Monday

GM CEO Mary Barra released a video to the public Monday stating that the company intends to cooperate with investigators, saying that “something went wrong with our process in this instance, and terrible things happened.” In the video, Barra outlines steps the company will take in its handling of the recall, including sending letters to affected owners, adding a second production line to make more parts available, and changing how the company handles recalls.

Taking that last point to heart, GM just yesterday issued three new recalls for defects unrelated to the ignition switch defect. Faulty air bags and brake systems are at the center of these three new recalls, which affect over 1.5 million vehicles.