On the General Motors Ignition Switch Compensation Fund

Motor City Blogman

In March, Toyota paid the U.S. Justice Department a record $1.2 billion fine for “hiding safety defects” from the public. It fixed floor mats and throttle pedals, and added “brake override systems” as if brakes didn’t already override the throttle. Toyota’s is the second of The Big Three safety/recall debacles. The first was Ford’s Explorer/Firestone rollover problem, which has left us the legacy of Curve Control, a lowest common denominator electronic nanny that prevents current Ford Explorers and the next Edge from understeer or oversteer on freeway ramps and other “treacherous” turns.

General Motors is in early stages of its redemption. On Monday, attorney Kenneth Feinberg, known for developing compensation packages for victims of the September 11 attacks, the BP oil spill in the Gulf and the Boston Marathon bombing, released a package to which GM must comply, no objections allowed.

The compensation package will pay survivors of crash victims who died (the known number is thirteen, but could go higher) $1 million, plus $300,000 to surviving spouses, $300,000 to surviving dependents, plus lost income and other determinable costs. Those injured in crashes determined to be the result of the defect will receive $20,000 to $500,000. Read further details about the compensation package here.

The big variable in all of this is the question of how many more death and injury claims will be made. Feinberg’s report admits that’s a tough question, because the Chevrolet Cobalts, Saturn Ions, and related models involved in accidents have long been destroyed. Many plaintiffs may have to rely on inherently unreliable police reports. GM will almost certainly pay out hundreds of millions of dollars, plus any federal fines yet to be determined.

GM and now Chrysler have since issued more recalls on more models that have flawed ignition switches. The long-term solution to this problem already is in place – keyless start buttons that can’t be weighed down by overladen key fobs.

Although there’s overwhelming evidence to suggest that GM ignored an obvious design flaw, the National Highway Traffic Safety Administration says there is no quantifiable standard for ignition key torque, and no requirement that the switches withstand a minimum key chain weight. GM’s guilt, like Richard Nixon’s, is in the cover-up, and indeed, the Old GM at least, suffered a Nixonesque paranoia in the way it hid or passed off problems, as outlined in Anton Valukas’ report.

New GM CEO Mary Barra (pictured above) can at least take solace in the way the general public is reacting. While her company has made it easy for Jon Stewart, John Oliver, and “Saturday Night Live” to make jokes at her expense, and while Toyota loyalists who would never consider a Chevy anyway are swearing off the company’s offerings, sales rose 1 percent in June compared with a very strong June 2013.

GM’s 2014 recall count is more than 29 million vehicles so far, including another 7.3 million cars and trucks for ignition switch problems. While critics bemoan the sheer number of GM recalls, there seems to be a sense among the general public that too many recalls is better than too few. The automobile is a complex piece of machinery. Solving one problem, such as offering nothing but keyless ignitions, can lead to other problems – such as, how do you shut down a car with a keyless ignition when the throttle pedal sticks?

Consumers must get used to recalls from all brands, if they’re not used to it already. GM should have acknowledged that its designs are susceptible to safety problems long ago, back in the Ralph Nader era of the mid- to late-‘60s. While Nader failed to persuade the automaker to be open about safety issues, Messrs. Valukas and Feinberg appear to be more convincing.