General Motors sued for $10B over potentially lost resale value
General Motors has one more recall-related lawsuit to add to its growing stack, but this time it isn't about the company's ignition switch fiasco. The latest case claims owners lost value on vehicles dating back to 2009, including those that the automaker never recalled. The law firm filing the suit thinks it could affect over 15 million vehicles in the US and be worth over $10 billion.
Law firm Hagens Berman Sobol Shapiro filed the case against GM in the Central District of California on June 18. The attorneys hope to get class-action status to cover potentially any owner of the company's vehicles made between July 10, 2009, and April 1, 2014. The lawsuit alleges that the continual recalls from the automaker this year "has so tarnished the affected vehicles that no reasonable consumer would have paid the price they did," cites Reuters, and claims that the business put profits ahead of safety to sell sold sub-standard models to consumers.
GM was already facing about $10 billion in lawsuits related to just the ignition switch recall, but so far, the automaker has vehemently fought back against allegations of lost resale value to its vehicles. In one recent example, Kenneth Feinberg, who is running the company's compensation fund, responded that he had no intention of negotiating with these claims, and he asked to judge to throw out the case. However, with lawyers apparently smelling blood in the water, it's hard to imagine that keeping them at bay.
Ken Feinberg details General Motors' ignition switch recall compensation plan
Kenneth Feinberg and General Motors have announced the long-awaited compensation plan for victims of the Detroit-based manufacturer's botched ignition switch recall.
The compensation plan will be open to family members of anyone that was killed or injured due to ignition switch failure. That includes drivers, passengers, pedestrians and other motorists that were killed or seriously injured in the incidents. While GM acknowledges 13 deaths and 54 crashes, the actual number of claims is expected to be much higher.
Plaintiffs can begin filing claims on August 1 with an end date of December 31. According to the Associated Press, Feinberg is expecting claims to be completed in 90 to 180 days.
As for the size of the compensation, there is no limit for deaths or extreme injuries (brain damage, loss of limb, paralysis or severe burns). Lesser injuries will come with smaller compensation, with Feinberg expecting to use the formulae and scale used for the Boston Marathon bombing compensation plan. General Motors, for its part, hasn't placed a limit on how much money Feinberg has at his disposal and the company is unable to overrule any of his decisions.
This won't be a free-for-all, though. The burden of proof is on the claimants, who must show that their crash was due to the faulty ignition switch. We're curious to see how this plays out, considering that a number of the cases GM has acknowledged involved alcohol and involved occupants that weren't wearing a seatbelt.
Finally, those that choose to settle with Feinberg surrender their right to sue GM at a later date.
General Motors' CEO Mary Barra issued the following statement after the unveiling of Feinberg's plan:
"We are pleased that Mr. Feinberg has completed the next step with our ignition switch compensation program to help victims and their families. We are taking responsibility for what has happened by treating them with compassion, decency and fairness. To that end, we are looking forward to Mr. Feinberg handling claims in a fair and expeditious manner."
The cars might be better, which wasn't exactly a hard thing to do, but they are the same company culturally they've always been. Even before this recall mess happened, I knew nothing had changed and it feels so good to see I was right. And I have zero doubt in my mind nothing will change after all of this, either.
I also find it comical that this apparent "investigation" shed no light on whether top execs like Bob Lutz and Rick Wagoner knew. I call BS.
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GM recalling 8.4M cars, 8.2M related to ignition problems
GM Announces Six Safety Recalls
DETROIT – General Motors announced today it will conduct six new safety recalls in the United States involving about 7.6 million vehicles from the 1997 to 2014 model years.
"We undertook what I believe is the most comprehensive safety review in the history of our company because nothing is more important than the safety of our customers," said GM CEO Mary Barra. "Our customers deserve more than we delivered in these vehicles. That has hardened my resolve to set a new industry standard for vehicle safety, quality and excellence."
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.
"We have worked aggressively to identify and address the major outstanding issues that could impact the safety of our customers," Barra said. "If any other issues come to our attention, we will act appropriately and without hesitation."
GM has made changes to every process that affects the safety of its vehicles, and the company has acted or will act on all 90 of the recommendations put forward by former U.S. Attorney Anton Valukas in his independent report to the company's Board of Directors.
GM expects to take a charge of up to approximately $1.2 billion in the second quarter for the cost of recall-related repairs announced in the quarter. This amount includes a previously disclosed $700 million charge for recalls already announced during the quarter.
Until the ignition recall repairs have been performed, it is very important that customers remove all items from their key ring, leaving only the vehicle key, and always use their seat belts. The key fob, if present, should also be removed from the key ring.
Feinberg is the same head arbitrator who handled the BP claims several years ago. I listened to him tonight on the PBS News Hour, interviewed by Judy Woodruff, and he is a sharp guy who knows his stuff. He seems to be a real expert on separating true, legitimate claims that have substance from the more frivolous ones.
Cadillac CTS, SRX Sales Halted for Ignition Switch Issue
General Motors has issued a stop-sale order on certain models of the 2003-2013 Cadillac CTS and 2004-2006 SRX.
According to an NHTSA filing, the American automaker doesn’t have a fix yet for the vehicles recalled in late June over the ignition switch issue. In the notice, GM is requesting its Cadillac dealerships to not sell 2003-2013 models of the CTS and 2004-2006 models of the SRX from their used-car inventories.
GM spokesman Alan Adler noted that the order “is still in effect for the foreseeable future,” and that the automaker’s engineers are “looking at one common solution” for the issue. Cadillac switched to a push-button starter switch on the 2014 CTS, so only older models of the sedan are affected.
GM Recalls 221,000 Cadillac XTSs, Chevy Impalas Over Brake Problem
An issue with the electronic parking brake in the Chevrolet Impala and Cadillac XTS is the latest recall being issued by General Motors.
The recall was prompted by an NHTSA investigation that was opened in April to look into “investigate allegations of inappropriate autonomous braking while driving”, according to The Detroit News. Both the Impala and XTS sit on GM's extended Epsilon platform. It affects 2013-2015 Cadillac XTSs and 2014-2015 Chevy Impalas.
In these cars, the electronic parking brake may not fully disengage and cause the brake pads to stay engaged with the rotor, thereby causing excessive heat and increasing the chance for a fire.
GM has not reported any crashes or injuries relating to this problem, and is instructing dealers to perform a software upgrade.
GM delivers best Q3 sales since 1980, 2.4M vehicles sold
GM Delivers its Best Third Quarter Global Sales Since 1980
Chevrolet up 9 percent in North America
Cadillac up 63 percent in China
Buick global sales up 7 percent
DETROIT – General Motors Co. (NYSE: GM) sold 2,449,595 vehicles around the world in the third quarter of 2014, up 2 percent compared with a year ago. It was the company's best third quarter since 1980. In the first nine months of 2014, GM sold 7,371,743 vehicles, up 2 percent.
Third quarter sales in the United States and China, the company's two largest markets, were up 8 percent and 14 percent, respectively. Year to date, sales in the United States and China were up 4 percent and 12 percent, respectively.
GM is on track to surpass sales of 3 million vehicles in China for the second consecutive year and the company expects to top last year's record sales of 3.16 million vehicles. During September, GM's cumulative sales in China surpassed 20 million vehicles.
"GM delivered its best third quarter global sales in 34 years thanks to solid growth in the United States and China, and steady improvement in Opel's market share," said GM CEO Mary Barra. "We have launches now underway, including the Chevrolet Colorado and GMC Canyon in North America, the Opel/Vauxhall Corsa in Europe, and the Buick Envision and Cadillac ATS-L in China, that will keep our momentum going."
Highlights (vs. 2013)
Chevrolet had record sales in China in the third quarter, up 13 percent to 169,830 units. For the first nine months of year, the brand is up 7 percent to a record 505,316 units. September was Chevrolet's best month ever in China.
Calendar year to date, Chevrolet sales in South Korea are at record levels.
The success of the new Chevrolet Silverado and GMC Sierra helped GM increase its estimated share of the U.S. retail market for large pickups from 32.7 percent in the first quarter of 2014 to 34.7 percent in the second quarter and 35.6 percent in the third quarter.
Buick's global sales were up 7 percent in the third quarter to 284,540 units and they are up 11 percent calendar year to date to 858,046 units, driven by strong growth in the United States and China. Buick's China sales were up 8 percent in the quarter to 220,578 units and they were up 11 percent to 670,999 units in the first nine months of the year.
In China, combined, sales of small SUVs – the Buick Encore, Chevrolet Trax and Captiva – were up 90 percent in the third quarter. In the United States, the Buick Encore has been the best-selling vehicle in its segment for six months in a row. The Chevrolet Trax will launch in the United States in early 2015.
Cadillac's global sales were up 4 percent in the third quarter and they are up 9 percent year to date, driven by strong growth in China. Cadillac's China sales were up 48 percent in the quarter to 18,665 units and they were up 63 percent to 52,425 units in the first nine months of the year.
Opel/Vauxhall gained market share in 11 European countries in the first nine months of this year, including Germany, where the brand earned 7 percent of the market, up 0.3 points.
GM hit with $10B lawsuit for losses on 27M recalled cars
Attorneys are continuing to fight to prove that the recalls from General Motors this year allegedly affect vehicle resale values. A $10 billion lawsuit, which is hoping to obtain class-action status, could cover as many as 27 million vehicles and consolidates hundreds of smaller claims. This latest case appears to be related to the one from June in California but is now in a New York court. Both are brought by the law firm Hagens Berman Sobol Shapiro LLP.
The case covers people who bought or leased a recalled vehicle from the so-called New GM from July 2009 to July 2014, as long as they kept it through at least mid-February when the repair campaigns started in earnest, according to Bloomberg. "The value of all GM-branded vehicles has diminished as a result of the widespread publication of those defects and New GM's corporate culture of ignoring and concealing safety defects," says the legal complaint, according to Bloomberg.
The attorneys might have an uphill battle to fight to win the case against the company, though. In regards to the earlier case in California, an analysis into GM's recalls found that they had no effect on resale value. Another study discovered basically the same thing when looking at other major repair campaigns, as well. Also, Kenneth Feinberg, the man in charge of the automaker's compensation fund, has refused lost value claims, at least against the Cobalt. Feinberg has already paid out 27 cases alleging deaths from the faulty ignition switches with at least 151 more to evaluate.
The automaker is also facing another, smaller lawsuit focused on just ignition-switch-related claims. Since this falls under the so-called Old GM, a bankruptcy judge has to rule whether the case can move forward. The decision is expected sometime next year, according to Bloomberg. The company would like the claims to be invalidated.
GM's latest official tally puts the company at 74 recalls in 2014 covering roughly 26,495,070 vehicles in the US.
With the submission deadline for the GM compensation fund nearing, the approved death count continues to rise.
The number of deaths related to the massive ignition switch recall is now officially at 49 along with seven serious injuries and 65 lesser injuries. The latest report shows that a total of 2,818 claims have been submitted and of those, nearly a third are still under review. As for applications associated with fatal accidents, there are still 84 to be reviewed meaning the death toll could continue to increase.
The submission window for claims will end on January 31 after being extended from its initial deadline of December 31.