WASHINGTON — General Motors Co. on Monday became consumed once again by the safety crisis it cannot seem to shake, announcing the recall of 8.4 million more vehicles worldwide – most of them for an ignition defect similar to the flaw that the company failed to disclose in other models for more than a decade.
The announcement came just hours after Kenneth R. Feinberg unveiled a plan to compensate victims of accidents involving some of the 2.6 million GM vehicles already recalled for the earlier ignition flaw, promising swift payments for people who were critically injured and at least $1 million for families of those who died.
The new recall announcement seemed to deflate whatever good will GM had generated with the unveiling of Feinberg’s plan. Trading in GM stock, which had risen slightly on Feinberg’s news, was suspended temporarily on the New York Stock Exchange while the announcement about the recalls was made. (The stocked closed down about 1 percent.)
“It’s kind of like a festering wound,” said Lance Cooper, a Georgia lawyer who represents numerous clients with ignition switch claims. “The more you cut, the more you find.”
The details of the new recall sounded familiar. Keys could inadvertently shift while the cars were running, shutting off the engine and disabling air bags and other important power safety features. The vehicles were older, this time dating as far back as the 1997 model year. There was a toll linked to the defect — seven crashes, eight injuries and three fatalities.
And the National Highway Traffic Safety Administration had been receiving dozens of complaints about the ignition issues in the cars for years. In 1997, some customers alerted the agency that they could not turn the keys in their Chevrolet Malibu. By 1998, some drivers were complaining that their ignitions did not work, according to its database.
GM said it would take an additional $500 million charge against earnings to pay for the new recalls. Through Monday – the last day of the second quarter – GM has said it will spend $2.5 billion this year to fix safety problems, before Feinberg makes the first payouts to victims.
Even by GM’s recent standards, the announcement of the latest recall was stunning, bringing the automaker’s total through the first six months of the year to about 28 million vehicles. Last year, all automakers combined recalled about 22 million. In all, there are 64.6 million GM vehicles registered in the United States, according to Experian Automotive, an information services company.
Even with the new round of recalls, the plan by Feinberg, a compensation expert hired by GM, is seen as critical to the company’s ability to move beyond a crisis that has prompted criminal investigations, congressional hearings and scores of lawsuits.
The plan he outlined Monday, which provides for payouts even for accidents that have not yet happened (crashes through Dec. 31, 2014, are eligible) could cost GM dearly – perhaps in the billions – but it is seen as an important step toward restoring public trust, as well as keeping the company out of long and potentially more costly court battles.
Feinberg refused to speculate on the overall numbers until the claims have been filed. The window for filing is narrow – Aug. 1 through Dec. 31. The first checks are likely to go out in the fall, and Feinberg and his associates said they hoped to issue the final payments by the middle of next year.
The plan starts with $1 million for each death. Added to that will be a calculation of lifetime earnings lost as well as $300,000 for a spouse and for each dependent.
Before a room crowded with reporters and a few victims’ relatives, Feinberg outlined carrot after carrot to entice those who suffered to take the money, instead of taking GM to court. The company would not hold driver negligence like intoxication, texting, speeding or drug use against anyone who files a claim, he said. It would not invoke its legal protection from liabilities involving accidents before its July 10, 2009, bankruptcy restructuring agreement. It would make the payments fast — within 90 days for many — and would accept circumstantial evidence unlikely to carry weight in court.
And there would be is no cap on the overall amount of money GM has agreed to spend on victims’ payments.
They were Laura Christian, the birth mother of Amber Rose, whose death GM includes in its 13 fatalities, along with Rosie Cortinas and Monica Coronado, the mother and sister of 23-year-old Amador Cortinas, killed this past fall when the Cobalt he was driving crashed.