According to media reports, a
General Motors Co.
) employee informed the company by e-mail about the safety problem
related to the faulty ignition switch in Chevrolet Impala in 2005
itself. Lawfully, automakers are supposed to alert the National
Highway Traffic Safety Administration (NHTSA) about any safety
concern in vehicles within five business days of recognizing the
problem. Consequently, the automaker may face another
government fine for the late recall.
Last month, General Motors agreed to pay a fine of $35 million to
the U.S. safety regulators due to the late recall of 2.6 million
older-model small cars associated with 13 front-seat fatalities due
to faulty ignition switches. This is the maximum amount of fine
which the government can impose. However, it only constitutes one
day's revenue of General Motors based its first-quarter 2014 sales.
According to the email dated Aug 30, 2005, a General Motors
employee's 2006 Chevrolet Impala got stuck on the Interstate 75
near Detroit after hitting a bump. To avoid a crash, the vehicle
behind the Impala had to take a sharp turn. A General Motors
mechanic had identified the cause to be a faulty ignition switch.
After recognizing the defect, the vehicle owner had e-mailed 11
colleagues about the issue, which she believed would lead to a big
Moreover, the NHTSA's web site contains more than 100 complaints
about sudden halting of the 2006-2009 Impalas. However, General
Motors did not comment on the possibility of another fine.
This issue was raised during the meeting held between General
Motors' CEO Mary Barra and the U.S. Congress on Jun 18 while
discussing the delayed recall of the 2.6 million vehicles with
defective ignition switches.
After almost a decade of recognizing the defect, on Jun 16, 2014,
the automaker announced that it is recalling 3.16 million vehicles
of model years 2000 to 2014 from the U.S. to fix faulty ignition
switches. The recalled vehicles include Buick Lacrosse of model
years 2005-2009, Chevrolet Impala of model years 2006-2014,
Cadillac Deville of model years 2000-2005, Cadillac DTS of model
years 2007-2011, Buick Lucerne of model years 2006-2011, Buick
Regal LS & GS of model year 2005, Chevy Monte Carlo of model
years 2006-2008. The total recall, including vehicles in the U.S.,
Canada, Mexico and exports, covers 3,360,555 vehicles.
According to General Motors, a heavy key ring or uneven roads can
cause the ignition switch to shift away from the run position, thus
affecting the power steering and power braking. In such a
situation, air bags will not be deployed in case of a crash.
Earlier, automakers like
Ford Motor Co.
Toyota Motor Corp.
) have also been fined for late recalls. In 2013, Ford had to pay a
$17.4 million penalty for the late recall of Ford Escape SUVs with
defective gas pedals. Toyota also paid a lump sum fine of $66
million for delayed reporting of safety issues in its vehicles.
General Motors currently holds a Zacks Rank #3 (Hold).
Fox Factory Holding Corp
) with a Zacks Rank #1 (Strong Buy) is a better-ranked automobile
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