GM To Pay Over $1.4 Billion In Ignition Switch Settlements

GM CEO Mary Barra (Credit: General Motors )

GM is going to pay out over $1.4 Billion for settlements related to the whole ignition switch problem. That’s a huge chunk of change for the automaker, but believe it or not it’s far less than many industry analysts predicted it would have to pay. It also comes with a huge bonus: no GM employees are going to sit behind bars.

Plenty of people have called for CEO Mary Barra and many other executives’ heads on pikes. At points, some questioned if different engineers attached to the whole ignition switch coverup would end up in a federal prison cell. Instead, the Department of Justice cut a deal with GM, allowing the automaker to pay $900 million in a criminal settlement. That figure could have been much, much higher and had much darker consequences attached to it as well.

Reuters is reporting that as part of the criminal case deal, GM is admitting it didn’t divulge information about the faulty switches as it should have. The settlement includes having an independent observer look for other safety-related issues within the company, a condition that will last for the next three years. If GM doesn’t comply, it could be criminally prosecuted.

At the same time, GM also recently announced it’s paying out $575 million as a settlement for two civil cases. Combined, that’s $1.475 billion that’s going toward putting this issue to rest.

Will this news tank GM vehicle sales? Likely not. In fact, since the whole ignition switch recall began, along with a record-breaking number of other safety recalls, GM has seen a huge sales surge. Management has been effective at convincing the public at large that the “old GM” is dead and that things are changing for the automaker. It’s also churning out some incredibly compelling products since emerging from bankruptcy, and as they say the proof is in the pudding. So while these settlements are big, in the long-run they’ll likely have little effect on GM’s market prosperity.