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Personal Finance > Autos

Gov't safety agency: GM slow to act
In documents relating to a record fine, NHTSA called carmaker tardy in responding to safety issues.
January 13, 2005: 2:14 PM EST

NEW YORK (CNN/Money) - General Motors Corp. has repeatedly delayed reporting vehicle defects that could result in recalls, government regulators said in public documents provided by the Center for Auto Safety, a safety advocacy group.

The National Highway Traffic Safety Administration fined GM $1 million to settle charges that the company failed to conduct a timely recall in relation to a windshield wiper defect on some GM SUVs. The February 2004 recall involved 636,000 vehicles.

The fine, announced on Dec. 29, was the largest civil penalty ever assessed by NHTSA. In a letter sent to GM by a NHTSA attorney, the agency called GM's alleged delay in notifying regulators of the defect "not an isolated incedent."

Despite the settlement, GM denied the allegations in the documents relating to the deal.

Under the terms of the TREAD Act, passed by Congress in 2000, automakers and auto equipment makers are required to promptly report safety-related defects to NHTSA or face civil or criminal penalties. Under the law, NHTSA can assess civil penalties as high as $15 million per incident.


Quality control checks by GM revealed the defect shortly after production of the vehicles began in October 2001.

The company began taking steps to deal with the problem the following month. GM ultimately resolved the issue a year later -- but did not notify the regulators at NHTSA -- according to a letter sent by Jacqueline Glassman, chief counsel for NHTSA, to GM in March 2004.

NHTSA opened its own investigation of the problem in September 2003 and requested information from GM. A month-and-a-half later, GM responded with information about its own investigations and steps to fix the problem, as well as data about two accidents related to the wiper motor failures.

GM did not dispute the facts as presented in the NHTSA letter, in which NHTSA offered to settle the case with a $3 million fine. Because the case involved more than one violation of regulations, the letter stated, GM's potential liability "far exceed(ed)" the $15 million maximum.

"More than a year before it notified NHTSA of any defect, GM had experienced high and growing warranty claims, had recognized that significant numbers of wiper motors were failing in service, had completed both a partial and total redesign of the wiper motors, and had expended significant resources in bringing this redesigned part into production," the regulator's letter reads.

Later in the letter, NHTSA calls the wiper problem part of a larger pattern of behavior for the world's largest automobile manufacturer.

"GM's recent history with regard to the timing of defect determinations has been, and continues to be, a matter of significant concern to the agency," the letter reads.

GM responds

GM responded to NHTSA's letter with one in early April in which the company called the $3 million penalty "inappropriate."

That letter, from Thomas Gottschalk, GM's general counsel, said the there was "legitimate doubt" that the wiper problem was a genuine safety concern. Gottschalk also disputed the notion that the company had been slow in dealing with recalls, saying that perception was based on "earlier history."

"This arose from a good-faith disagreement between us and NHTSA," GM spokesman Alan Adler told CNN/Money.

In the final $1 million settlement, GM denied that it had violated any regulations.

"We felt this was large enough to send a message," NHTSA spokesman Rae Tyson said of the final settlement amount.  Top of page

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