GM Settles Ignition Switch Lawsuit; Will Pay $900M Penalty [News]

Last year, GM recalled 2.6 million older small cars worldwide to replace the faulty switches.

General Motors is settling with victims of its cars that have problems with its ignition switch.

General Motors will look to self-driving cars to boost safety, as the company attempts to emerge from the $900m black cloud of its Justice Department settlement. Now, an appointed monitor will keep an eye on the company’s handling of safety defects.

Bharara said, “They let the public down”.

This settlement relates to a faulty ignition switch that was installed in various United States models, including the Chevrolet Cobalt and HHR, Pontiac G5 and Solstice, and Saturn Ion and Sky. “Still, this agreement will allow some healing, as GM recognizes, through its payment of financial compensation, the needlessness of this enormous national tragedy”. GM is also adding 30 product safety investigators.

In the private lawsuits, GM said it had set aside $575 million to settle the cases of about 1,380 people, all represented by Robert C. Hilliard, a lawyer who is among those leading the class-action cases against the automaker.

GM chief executive officer Mary Barra has taken many steps to address problems linked to the defects, including appointing a new safety czar and pushing out 15 executives.

The company acknowledged that some of its employees knew about the problem for more than a decade, but no cars were recalled until early past year .

News of the settlement drew a stern statement from US Democratic senators Richard Blumenthal, of Connecticut, and Edward Markey, of Massachusetts, who said the USA should have sought a larger monetary penalty and a criminal acknowledgement from GM. “The mistakes that led to the ignition switch recall should never have happened”.

Plaintiffs are seeking damages for deaths and injuries blamed on vehicle defects, as well as economic losses such as lost vehicle value.

The crisis has tarnished the company’s reputation among consumers, reduced its offers and has dampened its recovery from bankruptcy.

“We didn’t do our job”, she said.

Even with the settlements, another 454 death and injury cases remain as part of the consolidated federal court claims against GM. The sell off in the stock was on the back of an announcement by General Motors that it had agreed to pay $900 million to fend off criminal prosecution over the ignition switch scandal.

Two criminal charges drawn up against GM – wire fraud and scheming to hide information from government regulators – will be dropped after three years if the company cooperates fully.