General Motors Company (GM) Faces $10 Billion Lawsuit over Recalls Related To 27 Million Cars Sold Within U.S.

The year 2014 has been a challenging one for General Motors Company (NYSE:GM). The company has been hit by record recalls and compensations to victims of defects in its manufactured vehicles. Now, a lawsuit has been filed by car owners who are demanding to be compensated $10 billion over losses incurred due to fallen car prices occasioned by the many recalls. The suit covers a total of 27 million cars sold within the U.S. alone.

The lawsuit, filed in a federal court in Manhattan, covers vehicles that were either bought or leased after July 2009 when General Motors Company (NYSE:GM) had already been bailed out by the government from bankruptcy. There is already a separate case to determine whether those who suffered deaths, injuries or other losses during the bankruptcy period should also be compensated.

There are serious issues mentioned in the would-be class lawsuit. Part of the lawsuit claims that General Motors Company (NYSE:GM) was responsible for the price falls, citing that the company failed to disclose at least 60 defects in around 27 million cars sold in the U.S.


“New GM repeatedly proclaimed that it was a company committed to innovation, safety and maintaining a strong brand,” according to the filing. “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.”

Some of the defects that have led to the recalls are a faulty ignition switch, a chassis control module problem that may cause the vehicle to stall, defective parking break, part of fuel pump may overheat and melt, ignition key removable even when the vehicle is moving, and several others.

General Motors Company (NYSE:GM) is currently compensating victims of the faulty ignition switch with complaints to be accepted until December 31, 2014.

This article has been written by Victor Ochieng.

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