GM Recall Costs Estimated at $900 Per Car

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GM Recall Costs Estimated at $900 Per CarDespite losses of over $2.3-billion (approximately $900 per car affected), many consumers still don’t feel as though General Motors has been held accountable for their negligence, inaction, and intentional concealment of an ignition switch flaw that has now been associated to 124 deaths and 275 injuries over a decade.

For example, safety advocate Ralph Nader called GM a “homicidal fugitive from justice.” Clarence Ditlow, the executive director of the Center for Auto Safety in Washington, wrote in an email which read, “GM officials walk off scot-free while its customers are six feet under.”

Meanwhile inside GM, the mood seems humble and apologetic. “People were hurt and people died in our cars,” GM CEO Mary Barra told employees this week as she outlined a $900 million settlement with the U.S. Justice Department. “We accept the penalties being announced today because that’s what it means to be held accountable.”

Preet Bharara, the U.S. Attorney assigned to holding the automaker accountable for what he calls “corporate siloing” explained that, due to the high burden of proof, it is often impossible to prosecute individual executives and other employees even when there is abundant evidence of wrongdoing. Bharara stated that it is “not as easy as it looks sometimes” at a recent press conference in New York. “We’re not done,” Bharara said, “and it remains possible that we will charge an individual, but the law doesn’t always let us to do what we wish we could.”

General motors long list of expenses related to the ignition switch recall includes:

  • Federal fines of $935 million.
  • Up to $625 million for victim compensation.
  • More than $200 million to fix the cars.
  • And $575 million to settle many, but not all, of the pending lawsuits.

The Justice Department credits GM for extensive cooperation and for firing certain offenders within the company. As part of a deferred prosecution deal reached with the Justice Department, GM will be cleared of all wire fraud and conspiring to conceal a known safety violation from federal regulators after completing a three-year period of oversight by an independent monitoring firm. Renee Trautwein is less than pleased with this plea deal after losing her 19-year old daughter Sarah after she lost control of her 2005 Chevrolet Cobalt in June of 2009. “I’m very saddened by this,” Trautwein said in an interview shortly after the Justice Department settlement was announced. “A slap on the wrist like this is an insult to us. People knew. They got to retire and have big severance pay and walk away. They never paid for anything that they did.” Kenneth Feinberg, the attorney that GM hired to distribute its victim compensation fund, declared Sarah Trautwein to be among those who had died as a result of the ignition switch defect, a revelation her mother described as “very painful.” She said, “You have to understand, I thought Sarah fell asleep at the wheel. I was very angry at Sarah for that for five years. I want to see someone pay criminally. We can’t just sweep this under the rug.”

In addition to the $900 million Justice Department fine last week, GM was assessed a $35 million fine by the Transportation Department in May 2014. The fine was the maximum allowed by law.

S.M. Darby

S.M. Darby

I am a freelance author with over 25 years of experience as a professional, ASE certified automotive technician and shop owner, muscle car enthusiast, avid street racer, and classic car restoration specialist.