A new lawsuit claims GM is liable to compensate millions of customers for their devalued automobiles, and owes around three times its annual earnings in compensation
General Motors is liable for up to over $10 billion in damages after its ignition switch debacle lowered the resale value of millions of vehicles, according to a new lawsuit, the latest blow to the beleaguered automaker.
The lawsuit, filed by attorneys Hagens Berman Sobol Shapiro, says that GM hurt its customers by concealing defects, leading to recalls of more than 20 million vehicles so far in 2014, and devaluing a variety of late-model vehicles by about $500 to $2,600 in resale value, Reuters reports.
The plaintiff is Anna Andrews, a California resident and GM customer. Andrews is seeking class-action status for people who owned or leased GM vehicles sold between the company’s bankruptcy and April 1, 2014
It’s the first legal claim that GM owes customers some compensation for damaging its brand and reputation — a total exceeding $10 billion, to be paid to an estimated 15 million vehicle owners. The automaker brought in $3.8 billion in net earnings last year.
“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,” the complaint said.
It’s uncertain how successful the lawsuit will be.
GM said customers recognize the strength of the GM brand and that the company has seen increased sales and transaction prices.