General Motors (GM) has recalled around 1.37 million vehicles in the U.S. over the ignition switch problem and a federal probe has also been initiated in the case.
GM has recently told dealers that it will not repurchase any of the 1.37 million vehicles recalled which are linked to a faulty ignition switch. However, the company says that it will offer GM car owners $500 off the lease or purchase of a new GM vehicle.
According to The Detroit News, Greg Martin, a GM spokesman, has also confirmed the cash offer.
"In keeping with our commitment to help customers involved in this recall, a special, $500 cash allowance is available to purchase or lease a new GM vehicle," said Martin. "We have been very clear in our message to dealers that this allowance is not a sales tool and it is only to be used to help customers in need of assistance. Neither GM, nor its dealers will market or solicit owners using this allowance."
The recall cost will be between $2 million and $4 million to replace the defective ignition switch. The automaker also admitted that 12 deaths and 31 frontal crashes are linked to the faulty ignition switch.
The ignition switch issue has also led to several investigations, including a federal probe. Authorities are trying to establish why the carmaker did not respond to the faulty ignition switch sooner.
GM agrees that it came across an incident related to the ignition switch in 2004, but it was only until 2007 that the company redesigned the faulty switch. However, the company did not recall any of its vehicles until February this year.
The U.S. Attorney for the Southern District of New York has now started to investigate how GM handles complains about defective ignition system. Senate lawmakers say that they will start a probe of their own relating to the carmaker's actions.
GM is already under the scanner from National Highway Traffic Safety Administration (NHTSA) and faces a deadline of April 3 this year to answer a list of 107 questions, which are related to the company's timeline on the events that have head to a recall. NHTSA is now trying to establish if GM was non-compliant in the time it took to start the recall of the cars due to the faulty ignition switch.
