Per media sources, a federal appeals court has ordered U.S. auto giant General Motors GM to face a class action lawsuit that alleges the company violated the laws of 26 U.S. states by intentionally selling hundreds of thousands of vehicles equipped with defective transmissions. The decision, issued by the 6th U.S. Circuit Court of Appeals, paves the way for a group of drivers to collectively sue GM over problems associated with its 8L45 and 8L90 eight-speed automatic transmissions, which were used in Cadillac, Chevrolet and GMC models produced between 2015 and 2019.
The plaintiffs in this case have reported serious transmission issues, including shuddering and shaking when shifting into higher gears, as well as hesitation and lurching in lower gears, despite multiple repair attempts. Additionally, it has been alleged that GM instructed its dealers to reassure customers that these harsh shifts were merely "normal" behavior for the vehicles.
GM attempted to dismiss the lawsuit by claiming that most vehicle owners did not experience these transmission problems and, thus, should not be included in the class action. However, the three-judge panel from the Cincinnati-based appeals court ruled that the potential for vehicle owners to have overpaid for defective vehicles provided sufficient grounds for standing in the case.
The ruling is notable as it enables the case to proceed as a class action, potentially impacting around 800,000 vehicles, with 514,000 included in the certified classes. Among the models involved are popular vehicles such as the Cadillac CTS, CT6 and Escalade; Chevrolet Camaro, Colorado, Corvette, and Silverado; as well as GMC Canyon, Sierra and Yukon.
Class action lawsuits are often favored in scenarios like this, as they can lead to more significant recoveries for plaintiffs while reducing costs compared to individual lawsuits. Furthermore, the court dismissed GM's assertion that many claims should be settled through arbitration, directing the case back to U.S. District Judge David Lawson in Detroit, who had previously certified the classes in March 2023. As this case unfolds, it highlights the challenges automakers face in addressing consumer concerns over product quality and the legal ramifications that can arise from perceived negligence.
Zacks Rank & Other Key Picks
GM stock currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the auto space are Dorman Products, Inc. DORM, BYD Co Ltd BYDDY and Blue Bird Corp. BLBD, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for DORM’s 2024 sales and earnings suggests year-over-year growth of 3.7% and 35.5%, respectively. EPS estimates for 2024 and 2025 have improved 51 cents and 37 cents, respectively, in the past 30 days.
The consensus estimate for BYDDY’s 2024 sales and earnings suggests year-over-year growth of 21% and 14.7%, respectively. EPS estimates for 2024 and 2025 have improved 14 cents and 19 cents, respectively, in the past 30 days.
The consensus estimate for BLBD’s 2024 sales and earnings suggests year-over-year growth of 17.6% and 215.9%, respectively. EPS estimates for 2024 and 2025 have improved 65 cents and 80 cents, respectively, in the past 30 days.
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General Motors Company (GM) : Free Stock Analysis Report
Dorman Products, Inc. (DORM) : Free Stock Analysis Report
Blue Bird Corporation (BLBD) : Free Stock Analysis Report
Byd Co., Ltd. (BYDDY) : Free Stock Analysis Report
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