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General Motors Reaches AU$1.25 Billion Settlement Over Ignition Switch Deaths Photo:
Kez Casey | Sep, 18 2015 | 1 Comment

General Motors has reached a US$900 million (AU$1.25 billion) settlement with the US Government and civil plaintiffs over claims the company neglected to act on safety issues with ignition switches in some of its US-market models.

GM’s ignition switch recall crisis saw 2.5 million cars recalled last year, but delays in issuing that recall saw more than 120 deaths and hundreds more injuries linked to the fault.

Part of the $1.25 billion dollar sum will be used to settle criminal proceedings brought against the company by the US Government.

A further US$575 million (AU$796 million) of the total will be used to settle two class-action civil cases lodged by plaintiffs who were involved or affected by ignition switch-related accidents.

One of those civil cases represents 1380 injury and death claims consolidated in the New York federal court.

In 2014, the company issued a recall for faulty ignition switches which could slip from the ‘on’ position, shutting down the engine, steering and braking assistance and disabling airbags while the car was still in motion.

Media attention over the recall revealed that the issue was known to GM executives, but the recall action had been put off numerous times. GM initially denied the defect before eventually acknowledging the issue, but maintained it wasn’t safety related.

While the two settlements mark an end to the criminal case and most of the civil suits filed against General Motors, individual civil cases are still outstanding.

Claims against the company include a number of wrongful death, injury, or loss of value claims. Claims brought against pre-bankruptcy GM are also to be resolved, with a federal judge finding ‘new GM’ could not be held accountable for the actions of pre-GFC ‘old GM’ earlier this year.

Cases with previously agreed-upon trial dates are also still slated to go ahead.

GM’s current CEO, Mary Barra, who took over the position in 2014 before the recall erupted, has pushed a number of changes through the company relating to reporting and responsibility, in the hope of avoid a repeat of this incident.

General Motors is estimated to have lost around US$5 billion dollars in earnings as a result of the recall and its impact on the company’s public perception.

Safety advocates are outraged at the settlement and the lack of charges against responsible individuals. US attorneys have said individual charges may yet follow at a later date.

MORE: GM news, recall news

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