Wednesday, 02 April 2014 21:29

GM's Handling of Fatal Switch Recall Being Investigated

The U.S. Justice Department has started a preliminary investigation into how General Motors (GM) handled the recall of 1.6 million vehicles with faulty ignition switches linked to at least 13 deaths.

The inquiry is focusing on whether GM might have violated criminal or civil laws by failing to notify regulators in a timely fashion about the switch failures, said a person familiar with the probe who asked not to be named and isn’t authorized to discuss investigations.

Lawyers in the U.S. Attorney’s office in the southern district of New York are leading the investigation.

The inquiry comes as House and Senate committees and the National Highway Traffic Safety Administration (NHTSA) are also investigating GM’s actions leading up to the recall.

The initial recall on February 13, 2014, covered 778,562 Chevrolet Cobalts and Pontiac G5s. It was widened less than two weeks later to more than 800,000 additional vehicles. Those include 2003–2007 Saturn Ions, 2006–2007 Chevrolet HHRs, 2006–2007 Pontiac Solstices, and 2006–2007 Saturn Skys. Other models affected are the 2005–2006 Pontiac Pursuit sold in Canada and the 2007 Opel GT sold in Europe.

NHTSA, whose decision not to investigate the switch failures years ago is also under scrutiny by Congress, is focusing on what steps the automaker took to investigate and rectify engineering concerns and consumer complaints dating back to at least 2004.

GM has until April 3, 2014, to answer questions posed by the regulator in a 27-page order issued in early March 2014.

GM has said that heavy key rings or jarring can cause the ignition switches to slip out of position, cutting off power and deactivating air bags. The automaker has linked the defect to at least 23 crashes, including 13 deaths.

NHTSA could fine GM as much as $35 million, which would be the most ever by the U.S. government, if it finds the automaker didn’t pursue a recall when it knew the cars were defective.

GM’s stock has slid 9.2 percent in 2014 through March 10, 2014, and the recall is emerging as the first major test for new CEO Mary Barra, who was promoted two weeks before the company decided to implement the recall on January 31, 2014.

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