GM could face %10 billion lawsuit image

The company just ended round two of its congressional hearings for the mishandling of the 2.6 million cars equipped with defective ignition switches and now faces more bad news.

According to a new lawsuit, the loss of the resale value of millions of cars and trucks should be compensated financially by General Motors, because the slew of recalls and mishandling of safety issues damaged the brand – with the claimed amount potentially rising to more than $10 billion.

It all started with the very late recall – at least 11 years – of the small cars equipped with defective ignition switches – but in the mean time GM has reached an incredible tally of over 20 million cars involved in various recalls, including another almost 4 million that have a linked defect to the faulty ignition switch.

“GM’s egregious and widely publicized conduct and the never-ending and piecemeal nature of GM’s recalls has so tarnished the affected vehicles that no reasonable consumer would have paid the price they did when the GM brand meant safety and success,” said the complaint.

The new lawsuit, filed Wednesday with the federal court in Riverside, California by Hagens Berman Sobol Shapiro, claims that as GM concealed defects that it knew about and valued cost over safety, the company should repay the lost resale value (claimed at $500 to $2,600) to around 15 million more customers, besides the ones that had their cars recalled for the defective ignition switches.

Via Reuters