The largest US automaker and the third biggest in the world has seen its scandalous ignition switch defect death toll linked to 124 fatalities, but the ugly truth is that a global company will not count the loss of lives but its financial spending on the matter.
The Justice Department recently announced the company agreed to a deferred criminal fine to end in three years time the charges against it for covering up a fatal defect in its ignition switches. The toll is of $900 million, with millions of vehicles recalled into service to be fixed. But the true financial toll for GM is significantly higher – at least two billion dollars when considering the criminal, civil, victim settlements and also the internal cost of repairing the flawed cars. The list, broken down is – as far as we know for the time being – as follows: $625 million for the victims’ compensation fund, $900 million is the Department of Justice fine, another $575 million for civil settlements and the actual cost of the recalls. That means the 124 deaths delivered a fine of around $7.3 million per capita, though the count would also need to consider the settled injury claims.
GM admitted it failed to announce the US auto safety regulator – the NHTSA – and the public about the potentially fatal safety flaw that led to airbags not being deployed in its vehicles and therefore also misled the consumers in regards to the level of safety of its cars encompassed in the recall. The criminal investigation showed it was clear for GM as far back as the spring of 2012 the switches were flawed, but the company still failed to recall them. The “mistake” was made without senior management knowledge – including then chief executive Dan Akerson. And Mary Barra, the current CEO added she only found out in late 2013, shortly ahead of her coming to office.