Feds fine GM $35m, say 'delays will not be tolerated'

General Motors has agreed to pay a record $35 million civil penalty to the National Highway Traffic Safety Administration and take part in "unprecedented oversight requirements" after its decade-long delay in recalling Chevrolet Cobalts with faulty ignition switches.

Chevrolet's Cobalt model
Chevrolet's Cobalt model

General Motors has agreed to pay a record $35 million civil penalty to the National Highway Traffic Safety Administration and take part in "unprecedented oversight requirements" after its decade-long delay in recalling Chevrolet Cobalts with faulty ignition switches. The issue has been linked to 13 deaths.

The agreement includes notifying federal transportation officials of any changes to the company’s schedule for completing repair parts by October 4, the NHTSA said in a statement. It also ordered GM to make internal changes to its review of safety-related issues in the US and to improve its ability to account for the possible consequences of defects.

"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," US Transportation Secretary Anthony Foxx said Friday morning.

Foxx also urged Congress to support the Grow America Act, which would increase the department’s penalties in cases like this to $300 million from the current maximum of $35 million, "sending an even stronger message that delays will not be tolerated."

"No excuse, process, or organizational structure will be allowed to stand in the way of any company meeting its obligation to quickly find and fix safety issues in a vehicle," added NHTSA acting head David Friedman.

GM is paying additional civil penalties - $7,000 a day – for failing to meet the agency’s April 3 deadline to respond to 107 questions posed by regulators in their investigation of the recall. The company has stated it will not respond until former US Attorney Anton Valukas, on behalf of GM’s management, completes his own investigation.

"We have learned a great deal from this recall," GM CEO Mary Barra said, in a statement. "We will now focus on the goal of becoming an industry leader in safety. We will emerge from this situation a stronger company."

As part of GM’s response to the crisis, it has created a global product integrity unit to innovate the company’s safety oversight, according to Jeff Boyer, GM VP of global vehicle safety, who is assigned to integrate safety policies across the company. The automaker is also encouraging staffers to address safety concerns through its Speak Up for Safety initiative, and it has set new requirements for engineers to attain black-belt certification through Design for Six Sigma.

The fine followed Thursday’s news that GM is recalling an additional 2.7 million vehicles, bringing the company’s 2014 recall tally to 11.2 million – more than it recalled during the previous six years combined, based on NHTSA records.

On GM’s FastLane site, Boyer wrote Friday morning that the ignition recall has been a "challenging time" for GM customers, adding that the company is committed to executing the recall "safely and effectively."

The automaker plans to produce enough repair parts by October to fix the majority of the vehicles affected by the recalls.

Over the next several weeks, affected customers will receive letters telling them how to get their vehicles repaired.

"We are trying to minimize inconvenience as much as possible for our customers," GM social media strategist Phil Colley told PRWeek.

Last Thursday, GM posted a video on a recall microsite launched in March showing that the company’s recalled vehicles are safe to drive.

"We continue to update [the microsite] with the latest [information, updates, and progress on the ignition recall] and content," said Colley. "And we’ve done quite a bit of social outreach to communicate ignition recall information and the site to customers beyond our traditional outreach."

Last week, GM retained former PR leader Steve Harris to serve as its chief spokesperson for a limited time to aid the automaker’s response to the recall. And last month, former Clinton White House crisis comms specialist Jeff Eller, who left his role as EVP and co-chair of Hill+Knowlton Strategies' global crisis practice in March, was appointed to support GM with its response.

The automaker also retained Washington-based lawyer Kenneth Feinberg in March to explore compensation for families of accident victims. 

"GM’s ultimate goal is to create an exemplary process and produce the safest cars for our customers – they deserve no less," Barra said in a statement.

Here’s a sample of media reaction to the NHTSA fining GM on Friday morning:

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