Pressure Mounts on General Motors - Analyst Blog

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General Motors Company ( GM ) is facing a slew of lawsuits over defective ignition switches. A new lawsuit has emerged claiming that although faulty ignition switches were used in Chevrolet Cobalts manufactured till 2010, the company has recalled Cobalts of model years 2005-2007 only.

Another lawsuit claims that the position of the ignition switch makes the car key vulnerable to being bumped, leading to a shift from the run position to the off position. Thus, replacing the key would not be enough to fix the problem. A wrongful death lawsuit has also been filed against the company.

Meanwhile, a suit filed in Alabama claims that Cobalts built before Apr 2009 and many other General Motors cars have another problem for which the company had earlier issued technical service bulletins. These bulletins warned dealers that the ignition key could stick in the ignition cylinder of the cars. However, General Motors did not fix the problem.


Other consumers have filed suits claiming compensation for the financial losses they have suffered in terms of resale value and for the inability to use their cars. Investors have also sued the company seeking compensation for the loss in share value.

Meanwhile, a U.S. Senator has requested the Department of Justice to coerce General Motors into setting up a compensation fund for consumers who have suffered as a result of the defect either due to injury, death or damage.

Two consumers in Texas have also requested a federal judge to force the automaker to ask car owners to stop driving the recalled cars immediately. They fear that using the cars without fixing the problem will lead to more crashes and casualties. The company contends that it had asked car owners to drive the cars after removing everything from the key ring apart from the ignition key.

Meanwhile, General Motors has agreed to return the black box of a car that had crashed in 2010 due to a defective ignition switch.

Congressional hearings related to the case will begin from April.

General Motors currently holds a Zacks Rank #4 (Sell). Some better-ranked automobile stocks worth considering are Tata Motors Limited ( TTM ), Daimler AG ( DDAIF ) and Tesla Motors, Inc. ( TSLA ). Tata Motors and Dailmer sport a Zacks Rank #1 (Strong Buy) while Telsa carries a Zacks Rank #2 (Buy).



DAIMLER AG (DDAIF): Get Free Report

GENERAL MOTORS (GM): Free Stock Analysis Report

TESLA MOTORS (TSLA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Investing , Business , Stocks

Referenced Stocks: DDAIF , GM , TSLA , TTM

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