GM offers $500 to owners of recalled cars that want a new one image

The No.1 US automaker is feeling the pressure coming from the ignition switch recall problems and decided to provide loaner vehicles or a special “allowance” for those who want to change to a new GM vehicle.

The Congress, the Justice Department and the National Highway Traffic Safety Administration are all investigating the maker’s handling of the recall – with the company saying it first knew of the problems on Chevy Cobalts in 2004 and now detracting the statement to say it knew from 2001 on the Saturn Ion model.

“In keeping with our commitment to help customers involved in this recall, a special $500 cash allowance is available to purchase or lease a new GM vehicle,” said GM’s Alan Adler. The spokesman said the money is not used by GM to promote sales, but “only to be used to help customers in need of assistance.”

Also, the automaker is pressured to give up the immunity it received after getting out of bankruptcy in 2009 – as it could be used to avoid paying damages for the 1.6 million vehicles recall that were also linked to more than 30 accidents and 12 deaths. One safety advocate is actually already advising GM to get ready to pay as much as $1 billion in the potential legal claims.