Ignition-Switch Crisis Deepens on Recall of 8.4 Million More Vehicles
Ignition-switch crisis deepens on recall of 8.4 million more GM vehicles.Reuters

General Motors' ongoing safety crisis involving fatal ignition switches has gotten worse with the recall of over eight million mostly older cars in North America.

The latest recalls bring the total number of vehicles recalled by GM this year to 29 million, mostly in the US. GM, in 2013, sold 2.8 million vehicles in the US and 9.7 million globally.

The Detroit-based firm has consequently boosted the second-quarter charge to cover the cost of the recalls, to $1.2bn from $700m, according to a company statement.

Writedowns are expected to total $2.5bn so far this year. The first-quarter included recall costs of $1.3bn, or 48 cents a share.

GM's stock finished 0.87% lower at $36.30 on 30 June. The scrip is down 10.79% so far this year.

Mounting Recalls

GM on 30 June announced six additional recalls covering about 7.6 million vehicles from the 1997 to 2014 model years, and some 800,000 elsewhere in North America, according to media reports.

Affected models include the 2000-2005 Chevrolet Impala and 1997-2005 Chevrolet Malibu, alongside 616,179 Cadillacs from model years 2003-2014, including the CTS coupe and sedan and the SRX crossover.

As it has done previously, GM urged owners to "remove all items from their key ring", including the fob, leaving only the ignition key.

The company said the latest fatalities will not be included in its compensation fund.

The recalls came just hours after GM's compensation consultant, Kenneth Feinberg, announced plans to pay victims of crashes linked to defective ignition switches in older compact cars, such as the Chevrolet Cobalt and Saturn Ion.

Payments to the families of those who died will reportedly start at $1m but the victims will have to abandon their right to sue the automaker.

Legal Woes

GM legal problems are also on the rise. A county district attorney in California on 30 June announced a lawsuit accusing GM of being a threat to public safety by hiding at least 35 safety defects that have prompted the recall of millions of vehicles.

GM on 30 June said: "Among these recalled vehicles, GM is aware of seven crashes, eight injuries and three fatalities. The fatal crashes occurred in older model full-size sedans being recalled for inadvertent ignition key rotation. There is no conclusive evidence that the defect condition caused those crashes."

GM CEO Mary Barra said in the statement: "We have worked aggressively to identify and address the major outstanding issues that could impact the safety of our customers. If any other issues come to our attention, we will act appropriately and without hesitation."

A Reuters investigation in early June found that at least 74 people had died in GM cars in accidents similar to those that GM has linked to 13 deaths involving flawed ignition switches.