The $1 billion settlement between Toyota and the Justice Department "sets the bar" for future government actions against automakers that mishandle recalls, former Chrysler CEO Robert Nardelli told CNBC on Wednesday.
General Motors has come under fire for its handling of faulty ignitions and a subsequent recall of 1.6 million vehicles. GM announced Tuesday that it would recall an additional 1.5 million sport utility vehicles and luxury sedans. The automaker also plans to take a $300 million charge to cover costs related to 12 deaths linked to the ignitions.
Toyota's settlement with the U.S. government stems from its handling of consumer complaints tied to cars that accelerated unintentionally, an issue that caused the carmarker to recall millions of automobiles in 2009.
(Read more: Toyota in US settlement over unintended acceleration)
Nardelli, founder of investment firm XLR-8, said additional liability at GM depends on where the federal probe extends. He said GM's new CEO, Mary Barra, seems to be handling the recall troubles well, but in the end the responsibility lies with her. What's more, he added, it's likely that other top executives knewabout the ignition problems.
"She's going to have to distance herself because she's been there 30 years and it's hard to believe that an executive wouldn't be aware of these types of problems," Nardelli said. "It's hard to believe something of this magnitude hasn't surfaced itself. ... It's hard for me to believe that this was cordoned off in a closet somewhere."
—By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen. Reuters contributed to this report.