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GM Recall: Automaker Fined for Failing to Produce Correct Documents

Millions of vehicles have been recalled as a result of a defective product on General Motors cars, trucks and SUVs.

As mentioned in Part One of this series, GM has currently recalled 2.5 million vehicles because of faulty ignition switches. These switches can shift off and disable essential features (airbags, power brakes and power steering) while in motion.  Federal regulators from the National Highway Traffic Safety Administration demanded GM answer 107 questions regarding the product recall.

GM turned in over 21,000 documents reviewing the production process, but NHTSA is not pleased with the content in the documents. Among these documents was information stating that GM was aware of the switch problem since 2001. There was additional documentation that showed the switch was redesigned in 2006—but not assigned a new part number. GM also failed by not announcing the product change within the company; the information regarding the new product’s existence was not well-known internally.

Despite the large number of reports sent to NHTSA, GM only responded to a small portion of these questions. With more than one-third of the questions left unanswered, NHTSA has the authority to direct this case to the Department of Justice as a result of GM’s delay. If the Department of Justice does get involved, it would be a completely separate situation that would expedite the process and get GM to respond to the questions it didn’t answer initially. At this time, it would be in the automaker’s best interest to avoid going to court with the Department of Justice.

NHTSA fined General Motors $28,000 ($7,000 a day) for failing to comply with the original request. The federal agency stated that GM was deflecting answers. This fine is the maximum daily amount that NHTSA can impose on GM and could go up to $35 million total. NHTSA’s actions also signify that it is disciplining GM as a response to its own criticism (from Congress) for not doing anything sooner. Even though GM protested that it did adhere to the National Highway Traffic Safety Administration’s request, it will continue to be fined daily until they produce answers for all 107 questions.

In addition to dawdling with the investigation process, GM is also late in delivering the fix for the ignition switch to car dealers. News sources reported CEO Mary Barra had a plan to begin shipments for the ignition switch replacements in a reasonable fashion. The shipments are running behind schedule, while GM dealers have to deal with many phone calls regarding the recall.

GM had this to say in a statement, “We will continue to provide responses and facts as soon as they become available and hope to go about this in a constructive manner. We will do so with a goal of being accurate as well as timely. “

Jason F. Abraham
Managing Partner, Hupy and Abraham