NHTSA Slaps GM With $35 Million Fine Over Recall

General Motors will pay a record $35 million civil penalty to the U.S. government for not acting quickly enough to recall vehicles with defective ignition switches, a problem linked to 13 deaths in 32 crashes, and submit its safety procedures to unprecedented federal oversight.

“No excuse, process or organizational structure will be allowed to stand in the way of any company meeting their obligation to quickly find and fix safety issues in a vehicle,” David Friedman, acting administrator for the NHTSA says in a statement today.

“It’s critical to the safety of the driving public that manufacturers promptly report and remedy safety-related defects that have the potential to lead to deaths or injuries on our nation’s highways,” he says announcing the fine.

The maximum fine allowable from NHTSA was not unexpected. The penalty also forces GM to make changes to its safety oversight process, which the company began earlier this year by appointing a new safety czar and restructuring its global engineering organization to include a group solely focused on finding defects.

GM also will pay additional fines for not handing over to NHTSA quickly enough documents from an internal investigation into why the recall did not occur sooner and provide the government’s safety watchdog with regular updates on the automaker’s efforts to improve its safety reporting.

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

NHTSA additionally expects GM to complete production of enough redesigned ignition switches to fix each of the 2.2 million Chevrolet, Pontiac and Saturn vehicles caught in the recall by October 4. GM says today multiple shifts are producing new switches seven days a week.

“Given that the ignition switch was in very limited production for several years, GM’s supplier, Delphi, increased production, pulled machinery out of storage, and found new suppliers for some of the part components,” Jeff Boyer, vice president-Global Safety at GM wrote on a company blog. “We are buying new machinery and equipment to make parts quickly.”

In another unprecedented order by NHTSA, the government wants GM to take extra efforts to ensure that it fixes as many of the cars as possible. Oftentimes, an automaker issues a recall but owners fail to bring their cars into a dealership for the repair.

The recall affects ’05-’10 models of the Chevrolet Cobalt, ’07-’10 versions of the Pontiac G5, the ’03-’07 Saturn Ion, the ’06-’11 Chevy HHR, ’06-’10 Pontiac Solstice, and ’07-’10 Saturn Sky. None of those vehicles remain in production.

GM this year has taken historic actions to remedy defects, bringing back in an 18-week span more than 11 million vehicles. The actions are almost certain to push the industry to a record-high annual recall total.

GM yesterday said other recalls unrelated to the faulty ignition switch would cost it $200 million, bringing its safety defect costs this year to $1.5 billion. However, it may pay a larger price in losses to the value of company stock as major investors such as Warren Buffett have begun selling off large stakes.

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