After General Motors Co. was forced to recall 2.50 million vehicles in the U.S. and 36 million worldwide due to car defects tied to faulty ignition switches and other issues, they are now facing legal action. Despite previously denial, GM has recently admitted that at least 57 deaths were tied to the defective ignition switch. When a vehicle was running, the switch would unexpectedly slip out of the “run” position and cause the engine and all safety features to shut off, causing injuries to many drivers and passengers.
In response, there have been 104 lawsuits filed against GM on behalf of death and injury victims, as well as a major class action. The 108 suits in the class action are brought against the company over deflated car prices. To add to the heat, GM is also being investigated by state and federal agencies over the defects and other issues.
GM Struggles to Patch Up the Damages Done
Just last year alone, GM was forced to spend $2.9 billion on recall work and loaner cars for the millions of vehicles they had to repair across the globe. The total number of vehicles recalled in the United States was nearly 27 million. Though the company only admitted connection to 57 deaths, many believe that there are likely many more deaths attached to the defects. So far, the program that GM set up to compensate victims of car accidents tied to the defect ignition switch has dished out $93 million in settlement claims. It is expected for the program to cost up to $600 million, which will severely cut into GM’s estimated net income of $2.8 billion as of last year.
Not only that, but there were a 30 additional claims that arose out of just one week in February, bringing the total number to 4,345. Currently, the company has received at least 479 claims for death, with only 57 of those being deemed eligible for compensation. Out of all the current claims, more than 660 have already been deemed ineligible, while 1,457 are still being reviewed.
Was General Motors aware of the defects?
Probably the most controversial topic surrounding the ignition switch defects is whether or not powerhouse GM knew about the issue beforehand. According to some reports, GM was reportedly aware of the defects in numerous models for more than 10 years, never making a single recall until 2014. This failure to warn has sparked some frustration from advocates and injury victims alike.
The company's next steps in response to the design defects, recalls, hundreds of lawsuits, and class action suits may be great indicator as to its future as a car manufacturer.