UPDATE 1-US safety regulators probe GM recall linked to 13 deaths

Thu Feb 27, 2014 12:39pm EST
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By Ben Klayman

DETROIT Feb 27 (Reuters) - U.S. safety regulators have opened an investigation into whether General Motors Co reacted fast enough in its recall of more than 1.6 million cars over an ignition-switch defect linked to 13 deaths in crashes.

The issue could prove costly to GM as the automaker faces a potential fine from the U.S. National Highway Traffic Safety Administration, the cost of replacing the ignition switches in question and the possibility of costly lawsuits.

"The National Highway Traffic Safety Administration has opened an investigation into the timeliness of General Motors' recall of faulty ignition switches to determine whether GM properly followed the legal processes and requirements for reporting recalls," the safety agency said in a statement released on Wednesday.

GM, which went through a bankruptcy restructuring in 2009, could face a maximum fine of $35 million if it failed to notify NHTSA within five days of a recall after learning of a vehicle safety defect.

The company did not say how much the recall would cost, but LMC Automotive analyst Jeff Schuster said the biggest cost to the automaker could result from the flurry of lawsuits likely to be triggered by the defect and the company's actions.

Toyota Motor Corp last year paid more than $1 billion to resolve economic-loss claims related to the recall of millions of vehicles for unintended acceleration. The Japanese automaker is still trying to settle personal-injury lawsuits.

GM's recall was to correct a condition that may allow the engine and other components, including front airbags, to be unintentionally turned off.   Continued...