General Motors (NYSE:GM) recall on faulty vehicles will cost $2.7 billion
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The Detroit based automobile company General Motors (NYSE:GM), has calculated its charges for car loans and recalls which this year rose to amount $2.07b. The company is facing some serious challenges and GM is finding itself against court cases being filed everyday. These different law suits are all regarding the dispute of recalling from GM (NYSE:GM).
GM (NYSE:GM) notified the NHTSA that the company will recall some models of its vehicles due to a faulty ignition switch which can oppose the normal operation of the air bags. The switch may slide out of its position, which can stall the vehicle and disable some its major components like air bags. The vehicles to be recalled include:
- 2005-2010 models of the Chevrolet Cobalt
- 2007-2010 models of the Pontiac G5
- 2003-2007 models of the Saturn Ion
- 2006-2011 models of the Chevrolet HHR
- 2006-2010 models of the Pontiac Solstice
- 2007-2010 models of the Saturn Sky
General Motors Co. (NYSE:GM) recently spent large amounts of revenues on several repair jobs. Estimates from a regulatory filings showed that the company spent around 680 million dollars to repair faulty ignition assembly in more than 2.05 million cars, while almost 325 million dollars were expended to replace these ignition keys in some 12 million cars. This is quite a large amount to be spent on faults and repairs over a period of just nine months. The company (NYSE:GM) has recalled almost 34 million vehicles during this 9 month period.
General Motors (NYSE:GM) revealed and discussed about some of the latest law suits filed against the company. Cases which ware filed in the Manhattan Federal Court stated customers demanding 10b dollars to make up for the recent fall in prices and several damages in their vehicles, believed to be incurred due to the recall of the 27 million faulty vehicles.
Most of the filings were made due to the fact that the customers believed the company (NYSE:GM) knew about the defects in their products yet they still continued the supply and risked the money and lives of thousands of peoples. Complaints of this kind were put above all the other 150 cases against the company. The cases were either bundled into two different group actions in New York, or filed separately in the federal and state courts across the country.
The company’s CEO Marry Barra has promised to look into the claims for these damages filed by its customers except for the damages incurred from accidents due to defective ignition switches by the drivers. General Motors (NYSE:GM) has clearly denied that the recall is responsible for the fall in prices. The ignition switch problem was believed to be the company’s (NYSE:GM) largest recall, which was accounted for hearings from the Congress, regulatory fines, a Federal Probe and a CA county lawsuit.
The death toll due to faulty ignition switches has increased to 30 and there is more to come as new claims will be filed till the company’s pre-defined deadline in December. According to Kenneth Feinberg, (who has been handling GM’s (NYSE:GM) payments against their customers’ claims) the previous death toll was only 13. So far some 61 cases have been considered eligible for claims and these include filings for 30 deaths and 31 injuries.