The Justice Department and General Motors could reach a settlement over the faulty ignition switch recall by this summer’s end. People familiar with the matter said that the settlement may also trigger a fine of more than $1 billion dollars, but it could be the fastest way to solve the issue.
In 2014, GM recalled about 2.6 million cars that reportedly had defective ignition switches which could abruptly turn off their engines and prevent airbags from deploying. The issue cost the life of nearly 100 people, although GM knew about the issue since 2001, according to federal investigators.
The DOJ also found that the automaker failed to disclose or address the problem because it was too expensive at that time.
Currently, GM negotiates with the department over the fine, which might be higher than $1.2 billion as of now. Additionally, the company will also be forced to repair the switches free of charge and compensate the families of those killed in accidents because of the faulty design of their cars’ ignition switches.
Last year, Toyota had to pay $1.2 billion because of some of its vehicles’ faulty acceleration systems. The public learned about the issue in 2009 when a family of four was killed in their Lexus. Also, other drivers reported that their cars suddenly sped up on their own.
Yet, GM’s penalties may be even harsher. Although the initial plan was to design ignition switches in a sports car-like manner, the Detroit-based automaker ended up in developing faulty switches that could turn off the engine, power breaks and power steering. As a result, the driver had no way to control the vehicle, while he/she would have also lacked protection from air bags which were unable to inflate on a dead engine.
In 2014, GM announced several lay-offs, while some of the engineers involved in the scandal were under close federal scrutiny and may soon face criminal charges.
GM’s chief executive Mary Barra apologized last year for the faulty switches and promised that her company wouldn’t fight pending lawsuits. The GM’s internal investigation showed that Barra was not aware of the ignition switch problem.
If the Detroit automaker reaches a settlement with the DOJ this summer, the problem may be cleared faster than in Toyota case. It took more than 4 year for the Japanese company to pay the 1.2 billion fine. The GM is expected to pay the penalties faster because its top executives co-operate better with the federal investigators.
Carol Tobias, a law expert from the Richmond School of Law, believes that GM’s cooperating mood may not trigger a fine reduction because its conduct was much worse than that of Toyota. GM knew about the issue for more than a decade, and, according to some sources, even tried to cover it up.
Image Source: Slate