GM also faces possible criminal proceedings from the US Department of Justice following the carmaker's failure to disclose - for four years - its knowledge of a problem with ignition switches in some of its cars. The ignition defect causing air bags to fail deploy in affected models in the event of a collision.
"What we will never accept is a person or a company that knows danger exists and says nothing. Literally silence can kill," US secretary of transportation, Anthony Foxx said.
"What GM did was break the law," he said.
Following a reported 13 deaths along with countless injuries and complaints, the NHTSA has also ordered GM to throw open its books as the administration and the carmaker begin the mammoth task of undertaking repairs and of compensating victims.
"Safety is our top priority, and today's announcement puts all manufacturers on notice that they will be held accountable if they fail to quickly report and address safety-related defects," Mr Foxx said.
"While we will continue to aggressively monitor GM's efforts in this case, we also urge Congress to support our ‘Grow America’ Act, which would increase the penalties we could levy in cases like this from US$35 million to US$300 million, sending an even stronger message that delays will not be tolerated."
GM has now recalled 2.6 million vehicles from its Chevrolet, Saturn and Pontiac model ranges in the US, launching a social media campaign and a website designed to keep owners up-to-date on the progress of replacement ignition parts.
The carmaker says it has shifts running around-the-clock to produce and deliver the replacement ignition parts, while assuring customers that an ignition key used in the affected vehicles with no additional weight (key rings, for example) should present no danger.
‘Switchgate’ and the resulting fallout have created a ‘baptism of fire’ for new GM CEO Mary Barra, who used the situation as a chance to look toward the future.
During an address to US Congress, Ms Barra said GM would look to implement push-button ignitions in all future models.
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