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Pressure Mounting on GM to Establish Victims Fund

Analyst says maker may pay up to $3 billion in settlements.

by on Mar.26, 2014

General Motors could spend $3 billion to settle lawsuits and fines related to its faulty ignition switch recall.

The idea that General Motors might establish a fund to handle settlement payouts related to its ignition switch recall took on new life today when an auto analyst suggested the maker could set up a fund with as much as $3 billion.

Barclays Analyst Brian Johnson said in a research note today that the automaker may establish a settlement fund with as much as $1.5 billion in it to deal with the lawsuits filed against it related to the recall of 1.6 million cars with faulty ignition switches.

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The problem has been blamed for 31 accidents and 12 deaths, although critics suggest that the numbers could be much higher due to lax reporting standards for fatal crashes. (more…)

GM Changed Ignition Part Without Telling Drivers, Regulators

Lawsuit uncovers modification aimed at quietly eliminating problem.

by on Mar.25, 2014

A lawsuit filed by the family of a woman who was killed driving one of GM's recalled vehicle discovered the automaker changed the ignition without telling owners or federal regulators.

General Motors knew about a defect in its ignition switches eight years ago and changed the design of an internal part, but never told federal regulators or the drivers of its cars, according to evidence from a recent lawsuit filed by the parents of a Georgia woman who died in a 2010 GM car crash.

In February, the automaker recalled 1.6 million vehicles, saying their ignition switches could be accidentally turned from “on” to the “accessory” position while the car was being driven, shutting down the car’s power brakes, power steering and airbags. GM’s own figures have linked ignition problems to a dozen deaths.

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But evidence from a lawsuit filed by the parents of Brooke Melton, whose Chevy Cobalt spun out of control after shutting off on her 29th birthday, shows that in 2006 GM altered two internal pieces of its ignition switches in a way that would make it less likely for the ignition to shut off accidentally – and made the change without alerting the government or the owners of the cars affected. (more…)

Shareholder Files Suit over GM’s Handling of Recall

Company wiped out billions in shareholder value, suit claims.

by on Mar.24, 2014

A GM share holder filed a class-action suit against the maker and several executives, including CEO Mary Barra, alleging securities fraud.

Already facing an assortment of investigations into its handling of a deadly ignition switch problem – among them a criminal probe by the U.S. Justice Department – General Motors is facing a number of potentially costly law suits, including one that accuses it of securities fraud.

A GM shareholder filed a class-action lawsuit last Friday claiming shareholders were defrauded by GM due to its the handling of the ignition switch recall. But a number of plaintiffs’ attorneys also are threatening to bring suit against the embattled automaker on behalf of owners and victims of crashes linked to the safety problem, which has been blamed for at least 12 deaths and 31 crashes.

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“GM’s illegal and immoral activities during (2010 through March 2014) effectively eviscerated GM’s reputation for safety, quality, value and performance, said the lawsuit filed in U.S. District Court by New York-based law firm Pomerantz LLP and by Cafferty Clobes Meriwether & Sprengel LLP in Ann Arbor, the Detroit News reported. (more…)

GM’s Ecotec Engine Family Ready to Power Small Cars

Maker claims engines outperform competition.

by on Mar.20, 2014

The new Ecotec small engine portfolio will include 11 engines,with three- and four-cylinder variants ranging from 1.0 liters to 1.5 liters.

General Motors is ready to roll out a new family of small, three- and four-cylinder gasoline engines that will eventually power one of every four vehicles GM builds around the world.

Engines from the new Ecotec family are already scheduled to power the new Opel Adam, which goes on sale soon in Europe, and the next-generation Chevrolet Cruze for China that GM is planning to unveil next month in Beijing, GM executives said.

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The engines also will be used in vehicles such as the next generation Chevrolet Cruze that will be sold in the U.S. GM officials said. GM is promising to show a refreshed version of the Chevrolet Cruze at the New York Auto Show, but the next-generation Cruze is now expected to reach showrooms in late 2016. (more…)

Stung by Recall Scandal, GM Appoints New Safety Czar

Maker following in footsteps of Toyota.

by on Mar.18, 2014

Mary Barra, GM CEO, announced the appointment of Jeff Boyer as the maker's new safety czar today.

Stung by the backlash in the wake of an ignition switch recall linked to at least 12 deaths, General Motors is struggling to convince consumers – never mind federal regulators – that it is serious about improving its handling of safety problems.

A day after CEO Mary Barra issued another apology of the ignition switch fiasco, the chief executive has appointed a corporate safety czar to oversee future issues. The move echoes steps taken by rival Toyota Motor Co. which was embroiled in its own safety crisis four years ago.

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Jeff Boyer will immediately assume the newly created position of Vice President, Global Vehicle Safety. In that position, he will be the single executive overseeing all safety-related issued, according to a statement from CEO Barra, who said, “Jeff’s appointment provides direct and ongoing access to GM leadership and the Board of Directors on critical customer safety issues.” (more…)

Study Claims Deaths with GM’s Recalled Cars May Top 300

Safety group claims data shows problem, but GM, feds failed to act.

by on Mar.14, 2014

GM and NHTSA are being criticized for ignoring as many as 300 deaths in due to airbag failures that could be attributed to the faulty ignition switches in Saturn Ions and Chevy Cobalts.

The number of people killed due to airbags that failed to deploy due to the faulty ignition switch in the Chevy Cobalt and Saturn Ions recalled by General Motors may be significantly higher than first reported based on new study of the data.

According to a study by the Friedman Research Group, GM reported 303 deaths to the National Highway Traffic Safety Administration (NHTSA) in the vehicles between 2003 and 2012 due to airbag failures. The data was pulled from the agencies Fatal Analysis Reporting System. The study was released in the midst of a flap over GM’s handling of a recent recall for a defective ignition switch the maker admits is linked to a dozen fatalities.

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The Washington-based Center for Auto Safety (CAS) commissioned the study and released the results in an open letter to NHTSA late yesterday which criticizes the agency, as well as GM, for not moving more quickly to tackle the ignition switch issue and other problems. (more…)

‘Switchgate’: What Did GM Know and When Did GM Know It?

Revised timeline raises new concerns about long delay in launching GM recall.

by on Mar.13, 2014

There are new alegations that GM knew about the problem with its ignition switches as early as 2001.

This story has been revised to reflect General Motors’ official response to the letter sent to Mary Barra by safety advocates Clarence Ditlow and Joan Claybrook.

As new evidence continued to pour out about a break-in of Democrat campaign headquarters that came to be known as “Watergate,” one of the critical questions posed about then-President Richard Nixon was what did he know and when did he know it. Four decades later, a similar question is being asked about General Motors in what some are now calling “Switchgate.”

The “-gate” reference has become a tired cliché, applied in far too many instances of crisis and intrigue. But the fundamental concern is much the same as with the Watergate scandal: It now appears that General Motors may have had the first signs of trouble as early as 2001 with ignition switches it used in a wide range of its compact models now linked to a dozen deaths, 31 crashes and hundreds of complaint reports.

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That dates back to well before the first of the vehicles were put into production – and 13 years before GM announced it was recalling 1.6 million Chevrolet Cobalts, Saturn Ions and other models to make repairs to switches that could inadvertently turn from the On position to Off or ACC, in the process stalling out and leaving their airbags inoperable. (more…)

GM Brings in Heavyweight Law Firm for Investigation

Leader is former U.S. attorney with tough history.

by on Mar.10, 2014

GM has brought in an outside law firm, Jenner & Block, to investigate why the maker didn't issue a recall of vehicles like the 2007 Chevy HHR that had a faulty ignition switch.

General Motors took steps today to get to the bottom of the ignition switch recall by hiring an outside law firm, Chicago-based Jenner & Block, with a reputation for getting answers.

The firm’s chairman, Anton “Tony” Valukas, is working together with GM’s general counsel, Michael Millikin, to conduct an investigation into the recall. Valukas is best known as the lawyer to investigated Lehman Brothers after it collapsed in 2008.

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Valukas is a former U.S. attorney. It was his 2,200-page report outlining the causes of Lehman’s collapse that gained him notoriety. The report show that the firm had used a variety of accounting gimmicks to improve its balance sheet before it finally succumbed and filed bankruptcy. (more…)

Bankruptcy May Save GM Once Again

Filing terms prevent pre-2009 product liability lawsuits.

by on Mar.10, 2014

The 2004 Saturn Ion Coupe is on the list of vehicles being recalled by GM, but the automaker may not be accountable for the vehicles.

Bankruptcy saved General Motors and it may save the company again, at least from a significant liability issue and the millions of dollars that might go with it.

When GM went through bankruptcy it created a “new” GM leaving the debt and many of the liabilities with the “old” GM. This separation extends to product liability, according to an Automotive News report.

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Under the terms of its restructuring, GM’s product liability extends only to accidents that happened after the “new” company exited bankruptcy in July 2009, Automotive News reported. Plaintiffs injured before that time would have to take “old” GM to Bankruptcy Court. The chances of getting compensation in that setting are very low. (more…)

GM, Ford Post Record February Sales in China

Makers flourishing despite country’s sluggish economy.

by on Mar.06, 2014

The Ford Mondeo is a strong seller in China and helping lead the maker to rising sales there.

While the Chinese economy may be sluggish, those forces don’t seem to be hurting General Motors and Ford. The two U.S. automakers, which continue to expand their footprints in the country, posted record sales results in February after seeing strong results in January too.

GM reported its joint ventures sold 257,770 vehicles in China during February, setting a new record for the month as sales increased 19.9% from the same month last year. Continued strong demand for the Ford Focus, the best-selling nameplate in China last year, helped Ford China increase sales by 67% in February, with 73,040 vehicles sold.


Both GM and Ford are off to a fast start despite concerns about the Chinese economy, which is facing a variety of challenges and is growing at a slower pace than in the past. China’s economy grew 7.7% last year, according to Bloomberg, and similar growth is expected again this year. (more…)