By on March 10, 2014

GM

In addition to pledging to do business differently in the wake of a 1.6-million vehicle recall over a faulty ignition switch and the decade-long delay behind the recall, post-bankruptcy General Motors may find itself protected by its former self before the court of law for any accidents resulting from the switch.

Automotive News reports that under the terms of reorganization that helped the current structure at GM emerge from bankruptcy in July 2009, the automaker would only be responsible for accidents post-bankruptcy, while accidents before the aforementioned point in time would need to seek compensation from “old GM” in bankruptcy court.

However, the original plan would have shut the door on liability for any product made pre-bankruptcy — including the 1.6 million vehicles under the recall — had not GM bowed to pressure from critics and consumer advocates.

The division has proven successful thus far for “new GM,” as lawsuits made for pre-2009 claims against the automaker have failed thus far, as spokesman Greg Martin acknowledged:

It is true that new GM did not assume liability for claims arising from incidents or accidents occurring prior to July 2009. Our principle throughout this process has been to the put the customer first, and that will continue to guide us.

With 31 known accidents and 13 deaths tied to the faulty ignition switch — discovered in 2004 prior to the introduction of the Chevrolet Cobalt, but only corrected beginning last month — the more that fall under “old GM,” the more potential for savings for “new GM” in litigation that could come as a result; the automaker paid $601 million in 2012 for liability claims, according to a filing with the Securities and Exchange Commission.

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90 Comments on ““New” GM Only Responsible For Post-Bankruptcy Ignition-Related Accidents...”


  • avatar
    28-Cars-Later

    “However, the original plan would have shut the door on liability for any product made pre-bankruptcy — including the 1.6 million vehicles under the recall — had not GM bowed to pressure from critics and consumer advocates.”

    This is exactly what I thought and it seems “New GM” by acknowledging and apologizing for the issue opened itself to liability. Ironic.

    I would imagine Chrysler is in a similar legal position for recalls…

    • 0 avatar
      CJinSD

      The trial lawyers within the O###a regime were too strong for GM during their reorganization. GM wanted to emerge without liability for the deathtraps they built prior to reorganization, but the compromise with the ambulance chasers that bundled for O###a was that they would pay for tortes resulting from incidents that followed the bankruptcy date no matter when the car involved was unleashed on the public. This has nothing to do with GM apologizing or ending their several year pattern of lying about the safety of their ignition switches.

      This is just a give-back to the trial lawyers, since GM knew this chicken would come home. Considering the time that elapsed between the reorganization and GM doing anything to stop killing its customers, you could put the pieces together and see that the victims since were a conscious choice to get O***a’s cronies their cut of the cheese.

      • 0 avatar
        Pch101

        Do you actually believe any of that, or was that intended to be some sort of oddball comedy routine?

        • 0 avatar
          CJinSD

          Do you believe the ACA was intended to do anything other than what it actually has?

          • 0 avatar
            mike978

            It has allowed millions to buy private health insurance. You should be happy with the words “buy” and “private”.

          • 0 avatar
            Pch101

            Are you here all week? I guess that I had better tip my waitress (especially since you certainly wouldn’t want to increase the wage component of her earnings.)

          • 0 avatar

            My question is what are those who literally do not know what X means mouthing off in a thread about literally X?

            X here happens to be bankruptcy, but I still haven’t seen anything it can’t be.

          • 0 avatar
            TomHend

            It is absolutely fascinating to me how some people can not find one, NOT ONE THING, wrong with Obama or his administration-anywhere.

            Everything Obama has done is 100% correct, faultless and perfect.

            Amazing.

          • 0 avatar

            > It is absolutely fascinating to me how some people can not find one, NOT ONE THING, wrong with Obama or his administration-anywhere.

            There’s an opportunity for someone to document the vibrant cottage industry here. Interesting economics between producers and consumers of hay-men.

          • 0 avatar
            Pch101

            Right. The current president is somehow responsible for a vehicle part designed by a corporation that never employed him, which was used by said corporation before that same president even took office.

            “Absolutely fascinating” isn’t quite the term that I would use to describe that line of “logic.” “Somewhat amusing” and “incredibly moronic” would be more accurate.

          • 0 avatar
            Shawnski

            Maybe you should tip your server based on the outcome of their efforts. I like that better than not having a choice in renumeration based on someone else’s perception. A good server can make a h*** of a lot more than $10 per hour minimum.

        • 0 avatar
          TomHend

          Pch101 Most people could have a field day making fun of your public school education.

          • 0 avatar
            Pch101

            “Most people could have a field day making fun of your public school education.”

            In that case, you should explain why it’s such a struggle for you.

          • 0 avatar
            Big Al from Oz

            @TomHend
            If find most of what Pch101 submits into these blogs is inaccurate. These inaccuracies are caused by what he deems as a liberal thought process.

            But is he is handicapped by these perceived liberal thoughts.

            He rarely provides any form of credibility or validity to an argument when asked for proof.

            So, is he a troll or a propagandist?

      • 0 avatar
        28-Cars-Later

        The same would bode for Chrysler, in your opinion?

      • 0 avatar
        gmichaelj

        CJinSD.

        I think the problem I have with your trial lawyer payoff conspiracy thing is your apparent naivete in believing this payoff wouldn’t have been made under a Republican administration. The lawyers (R or D) need “wrongs” brought to court, or they don’t have a livelihood. Bush or any other Republican would have had to satisfy the Rule of Lawyer under any scenario (re-org or dissolution).

        EDITORS: Who is Cameron Miquelon? Was he introduced at some point, or is he the new TTAC Staff name? Don’t see him on the masthead. What is his background?

        • 0 avatar
          CJinSD

          http://influenceexplorer.com/organization/assn-of-trial-lawyers-of-america/d3db6dd51bef4b758300d6ea611f71ae

          No. The Republicans have their own failings, but this is pure moral relativist fallacy. Money in ambulance chasers’ pockets is money in their adversaries’ war chests.

        • 0 avatar

          Not a “he,” darling, nor am I a staff bot.

          My introduction came two years ago on the Ides of April, when I was just a small-time fashion blogger — who just so happened to love cars — who wanted to know if TTAC could use my writing skills.

          I wrote for a little while, but dropped off the map until JB asked if I was in a good position in my life to return. I was, and I came back in mid-October of last year with a story about Sir Mix-A-Lot selling one of his famed cars.

          And you are correct: I am not on the masthead. As DK noted in a comment a few posts ago, I am being mentored in the ins and outs of the automotive industry the same way Herr Schmidt mentored Monsieur Kriendler, in the eventuality that I will evolve from a “game-changing” news summarizing machine into something greater.

          And now, you know.

          • 0 avatar

            > I am being mentored in the ins and outs of the automotive industry the same way Herr Schmidt mentored Monsieur Kriendler, in the eventuality that I will evolve from a “game-changing” news summarizing machine into something greater.

            Not a bad place to be considering the circle of life on TTAC.

          • 0 avatar
            28-Cars-Later

            And knowing is half the battle… or so I was told.

          • 0 avatar
            gmichaelj

            Thank you Cameron.

      • 0 avatar
        toxicroach

        Not dumping liability for death and injures on a dead pile of liabilities and screwing the victims? What a cold blooded Machiavellian decision by the Obama administration. /s

        I feel like this is one of those topics where the tune would change the instant you knew someone who got hurt because of a product liability issue. Much like how my family hates entitlements until a family member needs social security disability, then it’s full steam ahead.

        P.S. the O**** thing screams lunatic, you should stop if you actually want anyone to listen to your opinions.

        • 0 avatar
          gmichaelj

          toxicroach:

          While I largely agree with your points and tone, I will say I thought the O###a thing was funny – at least at first. Also, I still think that while claiming to do it to help others (the families, the children, etc), the lawyers working on the GM bankruptcy were sure to help themselves and their profession first and foremost.

      • 0 avatar
        NeilM

        “…they would pay for tortes resulting from incidents that followed the bankruptcy…”

        Pay for tortes? Well that takes the cake.

        • 0 avatar
          Pch101

          Sweet.

          • 0 avatar
            TomHend

            @pch101 thanks for proving my point, you have to go right to calling people names, you don’t have opinions, your opinions have you.

          • 0 avatar
            Pch101

            Ouch. Tom must be less intelligent than even I had realized.

            Do yourself a favor, and type “torte” into a dictionary or your favorite search engine. Compare it to “tort” (no “e”), note the difference, then refer to the two comments above.

            Have a nice day, if you can.

          • 0 avatar

            > you have to go right to calling people names, you don’t have opinions, your opinions have you.

            Consider the common situation where some idiot is mouthing off as per usual self. An astute observation of this might be: “some idiot is mouthing off as per usual self”.

            This seems a quite literal fact, and not an opinion.

      • 0 avatar
        TomHend

        Hey CJinSD, do you want to start mocking pch101? Too easy right?

        • 0 avatar
          dolorean

          @Tom, just give it up man. I will let go the missing comma in “Too easy right?” because you actually managed to use the correct form of “too”! Now go get yourself a cookie and a gold star *tossles hair*

  • avatar
    kamiller42

    EPA waivers, special tax breaks, free tax payer money, and now this. The perks of being Obama’s car company keeps paying off.

  • avatar

    > post-bankruptcy General Motors may find itself protected by its former self before the court of law for any accidents resulting from the switch.

    Those blaming obama or osama or whatever his name is for ditching liability would do better to learn what bankruptcy means, or even better, what a limited liability corporation is.

    Personally I just assume those people need help spelling their own name, and still get disappointed more often than not.

  • avatar
    Halftruth

    F**kin GM.. did not the Fed require Chrysler to put tow bars on Jeeps that were near 20 years old (gas tank recall)? Those pre bankruptcy Jeeps were old Chrysler, weren’t they? How does GM get a pass here? Business as usual for GM. Didn’t they also pull this with the Malibu suspension problem where they would not cover warranty repairs on pre 09 cars but did so for the police? Total BS.. I wouldn’t give GM my money for anything. GM is just as bad as those that set up the bail out. Next time, let this God-awful behemoth die as it should have the first time.

    • 0 avatar
      APaGttH

      This is discussed above

    • 0 avatar
      Pch101

      You’re not understanding this.

      New GM is liable for recalls of any vehicles made by the old GM.

      New GM is not liable for crashes that occurred prior to the creation of the new GM.

      GM will be paying for the ignition recall. But anyone who died in an ignition-related crash prior to 2009 will have to sue the old entity that is in bankruptcy.

      • 0 avatar
        28-Cars-Later

        Thank you for clarity.

      • 0 avatar
        CJinSD

        Makes you wonder why GM wasn’t in a bigger hurry to stop the deaths resulting from a design error they knew they made back in 2004. Oh never mind. It doesn’t make YOU wonder. That would take actual critical thinking instead of merely regurgitating what you’ve been conditioned to believe.

        • 0 avatar
          Pch101

          Right. The engineers in 2004 were planning for bankruptcy in 2009. Why didn’t I think of that?

          • 0 avatar
            CJinSD

            Sorry for overestimating you again. It was ridiculous of me at this point.

            When negotiating bankruptcy in 2009, GM was well aware that they had a fleet of cars with this error. The bankruptcy wiped out their liability for the people they’d already killed. Had they instituted a recall in 2009, they could have prevented any deaths from occurring due to their culpable negligence under the bankruptcy agreement. All previous victims were off their books. They chose to keep killing people, even though they would ultimately have to pay for it, willfully forfeiting their get-out-of-jail free card. Now do you understand?

          • 0 avatar
            Pch101

            Here’s what I understand:

            1. You’re a nutter

            2. Auto companies try to get away with what they can (which helps to explain why reasonable people are wary of laissez faire deregulation)

            GM started receiving complaints about this five years prior to the BK. They were just as excited about recalling the cars four weeks before the bankruptcy as they were four years before the bankruptcy.

            This ignition matter was not central to the bankruptcy. The BK was a necessary condition of getting free federal money, and the alternative to the government-sponsored BK was liquidation. If GM management could have gotten the cash and prizes without BK, they would have preferred that; Chapter 11 was the government’s idea.

            As usual, your points are beyond left field and somewhere over in the next town. The mind of CJ is a bizarre and barren place.

          • 0 avatar

            > Sorry for overestimating you again. It was ridiculous of me at this point.

            Despite the usual mouthing off you seem to be having trouble with this critical thinking demo, so let me show how a trivial amount of thinking is done:

            > When negotiating bankruptcy in 2009, GM was well aware that they had a fleet of cars with this error.

            So they were prescient of opportunities to limit liability in the future. Very clever of those gubmint scumbags…

            > They chose to keep killing people, even though they would ultimately have to pay for it, willfully forfeiting their get-out-of-jail free card.

            But instead of wasting Old GM’s money on the recall and dumping that on the then shareholders, they were so dumb that they wait until now so everything but the old injuries are still on their hands. So gubmint scumbags not so smart after all unlike CJinSD who figures all this out.

            I don’t think this critical thinking exercise is going well for you here. In hindsight maybe this “thinking” business just ain’t your thing.

          • 0 avatar
            CJinSD

            “This ignition matter was not central to the bankruptcy. The BK was a necessary condition of getting free federal money, and the alternative to the government-sponsored BK was liquidation.”

            Do you know that the reason bankruptcy can restore a company’s viability is because it is a mechanism for addressing liabilities? It isn’t apparent that you do. Liabilities can be debts, liabilities can be existing contracts, and liabilities can be…liabilities. There is enough internal documentation to show that GM knew they had one in the form of millions of marginal ignition switches. GM negotiated with the O***a regime to arrive at a level of retained liability for vehicles they’d already sold. They knew that a big source of that liability would be cars that had these switches.

          • 0 avatar
            Pch101

            I can see that you’re determined to keep circling the drain.

            GM management didn’t want the bankruptcy. The BK was the task force’s idea, because it reduced the size of the bailout.

            GM management also didn’t want to recall the cars for five years preceding the bankruptcy.

            The notion that GM management was prompted to file BK because of this ignition issue shows how feeble your thought processes are. This ignition matter is small potatoes compared to all of the larger business problems that led to the bailout.

          • 0 avatar

            > Liabilities can be debts, liabilities can be existing contracts, and liabilities can be…liabilities. There is enough internal documentation to show that GM knew they had one in the form of millions of marginal ignition switches. GM negotiated with the O***a regime to arrive at a level of retained liability for vehicles they’d already sold. They knew that a big source of that liability would be cars that had these switches.

            Just a protip, repeating yourself isn’t really a form of critical thinking. Generally when someone else questions a part of the “logic” (in this case all of it) you address the specific concern in some way thus negating it. Since you seem intent on not giving up, try that instead.

          • 0 avatar
            CJinSD

            “However, the original plan would have shut the door on liability for any product made pre-bankruptcy — including the 1.6 million vehicles under the recall — had not GM bowed to pressure from critics and consumer advocates.”

            Gee Pch101. It seems like someone was thinking about product liability during the bankruptcy. I appreciate it that you’d rather read my comments than read the actual article, but it doesn’t make you particularly worth arguing with.

          • 0 avatar
            Pch101

            So the government wanted the new company to provide warranty work and take responsibility for recalls. Only a whack job would find that to be either surprising or a bad thing.

          • 0 avatar

            > but it doesn’t make you particularly worth arguing with.

            How I imagine your list of people worth arguing with:

            4. the mirror, very tough opponent.
            3. the dog, for an easier victory
            2. the liberal media, the tv can’t talk back unlike dog
            1. other inanimate objects, can’t even talk

        • 0 avatar

          > That would take actual critical thinking instead of merely regurgitating what you’ve been conditioned to believe.

          Hey dude, I’m still waiting on that demo of any sort of depth in anything:

          http://www.thetruthaboutcars.com/2014/03/smaller-jeep-to-slot-beneath-renegade/#comment-2919922

          Since imma nice guy, I’ll take critical thinking demo, too. I hope this one isn’t it.

        • 0 avatar
          Thatkat09

          If Barra is being honest, then this problem just came to her desk 2 months ago. And if Lutz is being honest, this problem never hit his desk at all since he says he learned of the ignition problems when everyone else found out. If this is true then the bureaucracy of old GM must have been horribly complicated. It wouldn’t surprise me one bit if this problem got stuck in some sub-committee of engineers until it finally hit Mary’s desk in January.

          • 0 avatar

            > If this is true then the bureaucracy of old GM must have been horribly complicated. It wouldn’t surprise me one bit if this problem got stuck in some sub-committee of engineers until it finally hit Mary’s desk in January.

            What’s quite interesting is to the Obama/Osama types GM is either a bumbling bureaucracy or evil intending incarnate or some clever self-serving schemer or the dumbest people on earth, depending mostly on what came out over the AM radio yesterday. Personally IMO it’s best to keep the bumbling bureaucracies and the dumbest people on earth distinct & separate.

          • 0 avatar
            Pch101

            If I understand it correctly, Obama is the ruthless gutless tyrant in “mom jeans.” (How that’s supposed to make any sense, I don’t know.)

  • avatar
    JD321

    What do you expect from sociopath state-worshiping chimpanzees (aka, “Liberals”)? Peaceful and voluntary human associations?

    • 0 avatar

      > What do you expect from sociopath state-worshiping chimpanzees (aka, “Liberals”)? Peaceful and voluntary human associations?

      Hey whatever happen to “fascist”? For a moment there I thought you were one of the smarter ones who didn’t just throw words like feces. Maybe it was just a coincidence, that’s too bad:

      http://www.thetruthaboutcars.com/2014/03/tesla-says-battery-gigafactory-will-not-be-built-in-california/#comment-2925858

      • 0 avatar
        dolorean

        Apparently Unca Rush, NewsCorps, and Mike Grudge couldn’t come up with their version of critical thinking for CJ and JD to parrot. And I’ve learned a lovely German word that describes the tin-foil hat brigade well; Backpfeifengesicht.

  • avatar
    Z71_Silvy

    Good. Driver stupidity is not the fault of the manufacturer

  • avatar
    geeber

    “Our principle throughout this process has been to the put the customer first, and that will continue to guide us.”

    Isn’t it best to follow this principle while the product is being designed, thus minimizing the chance of something like this happening in the first place?

    • 0 avatar
      Pch101

      In this particular case, the issue seems to have been that the individual crashes were often so extreme that it was presumed that GM’s components weren’t a relevant factor. It was easy to pass the buck while ignoring GM’s role in the aftermath, i.e. even a drunken fool who hits a tree at 65+ mph deserves the benefit of an airbag deployment, even if it wouldn’t have done any good.

      • 0 avatar
        doctor olds

        As a matter of law, GM should have no liability if the crash could not have been survived even with an airbag deployment. This didn’t help Ford in the Pinto days, of course.

        The number of cases “linked” to deaths is miniscule for the vehicle population and they will not all lead to judgement against GM.

        This is a far more serious issue of image versus safety risk.

        • 0 avatar
          Pch101

          While I understand your point, one would hope that GM would be at least curious about the failure of airbags to deploy in high-speed crashes, even if the deployment wouldn’t have improved the outcome and the crash was attributable to driver error or negligence. Those safety features are supposed to work, regardless of the IQ of the driver.

          • 0 avatar
            doctor olds

            Of course, every system is supposed to work!

            As a practical reality, nothing humans make is perfect. In fact, US safety law acknowledges this fact of life by the question “Is there “unreasonable” risk to safety.”

            There are a handful of cases in a population of hundreds of thousands of cars after years of exposure. The phrase “hindsight is always 20/20 is apropos in this case.

      • 0 avatar
        TomHend

        Why are you so angry?

    • 0 avatar
      Lou_BC

      @geeber – from a GMC corporate perspective, the customer they are referring to is the one who buys their stock.

      • 0 avatar
        doctor olds

        @Lou_BC- GM doesn’t much care who buys their stock! Why do you think they would? They do care about the price. They are customer focused, customer as in the buyer of their produces, and that has driven them to producing the best quality cars today.

        • 0 avatar
          dolorean

          I believe you are correct doctor. GM, as all good Corporations do, loves its shareholders and most especially the board members it has to pony up winning numbers for every quarter, more than it does its actual customer base. This is the purpose of the Corporation as is stated by its command philosophy. PCH made a very valid point above by stating that auto makers will attempt to get away with whatever they can IOT maintain a profit percentage, which in a truly free-market world would be Cavete Emptor for the consumer. Fortunately we have a honest broker in the gummint that, in theory, should balance the profit motive versus the protection of the consumer. It’s what makes our economy work.

  • avatar
    28-Cars-Later

    Amazing how something not remotely political, becomes political. Gentleman let’s save the mud slinging for a time when it is at least relevant.

  • avatar
    Lou_BC

    @28-Cars-Later -one can argue that once GMC was “bailed out” and became Gov’mintMotors……. it became political fair game.

    • 0 avatar
      28-Cars-Later

      So its fair game forever? I’ve moved on, the bailout would have happened no matter who was in power, only the details of which may have changed.

    • 0 avatar
      84Cressida

      I would also argue the fact that NHSTA seemingly did nothing about this, 5 years after GM left bankruptcy and mere months after the US Govt divested their shares in GM, also makes it political.

      Not to mention the fact they’re hiding behind the scapegoat, total BS excuse “well we’re not the same company” due to the BK, also makes it political.

      The moment GM took the first dollar of bailout money is the moment they became a political punching bag.

      • 0 avatar
        Pch101

        I can appreciate that conspiracy theories provide comfort to those who want to avoid the heavy lifting that thinking requires.

        But it should be obvious that this issue is hitting a flashpoint because of the lawsuit recently settled in connection with the death of Brooke Melton. http://www.usatoday.com/story/money/cars/2014/02/18/gm-cobalt-g5-faulty-ignition-switches-recall-deaths-airbags/5582241/ It’s because of her attorney that we are beginning to learn more about this.

        What this case, the Hyundai MPG case, and the Ford hybrid MPG case all have in common is that lawsuits led to government action. People can whine about ambulance chasers, but they are helping the government to do its job.

        • 0 avatar

          > What this case, the Hyundai MPG case, and the Ford hybrid MPG case all have in common is that lawsuits led to government action.

          Generally speaking regulatory bodies tend to be reactionary in nature. As typical bureaucracies they’re usually more concerned folks fills out the forms right than get up in the hassle of everyone’s bidness.

          While these bodies predictably stay the course the public perception of their actions is what actually varies. It seems every act is either inadequate, or overstepping, *at the same time*.

          Consider the Toyota unintended acceleration cluster-f. Turns out to be nothing but jammed mats at worst, and driver incompetence regardless. All the drama in effect resulting from stupidity rather than technical problems.

          This case looks more like a design oversight, perhaps not unlike the Firestone fiasco where a number of circumstances conspired to cause the result. We should prolly expect the same circus of know-nothings trading on their ignorance and blaming things they don’t understand.

      • 0 avatar
        28-Cars-Later

        I’m a sucker for a good theory but I’m not seeing it here, esp since I thought the Feds lost money on the sale of the GM shares. NHTSA has been quite busy in the past few years as has been pointed out on TTAC in weeks prior, perhaps in their prosecution of other matters this was missed? The whole bailout was unusual and in a normal bankruptcy and liquidation, whatever was left of the liquidated company would be liable, not a new firm. However this is not the case of the auto bailout and while they must recall the earlier product to quote the article “It is true that new GM did not assume liability for claims arising from incidents or accidents occurring prior to July 2009.” This is the result of clever legal maneuvering, not a conspiracy.

        EDIT: Pch101 has a point, this whole thing may have remained buried if not for this lawyer in the link he posted.

        • 0 avatar
          Pch101

          You should also note that the lawsuit against the dealership that failed to repair the car is still in progress.

          Reading between the lines, the lawyer leaked this information in order to bolster his case against the dealership. The blowback that has come from this will almost certainly increase the chance of an out-of-court settlement and the amount of the payout.

          • 0 avatar
            28-Cars-Later

            Not in the legal profession but I’m curious why GM in their settlement with the victim’s estate did not require confidentiality as part of the deal. Although we can’t know for sure, I tend to agree with your interpretation of the lawyer’s behavior.

          • 0 avatar
            Pch101

            All we know is that there was a settlement. We don’t know the terms of the settlement, nor (to my knowledge) has GM claimed liability.

            I doubt that there is a confidentiality problem here. For one, the lawyer would know better than to jeopardize the settlement (and his fee.) The allegations themselves are presumably already part of the public record, included in the court filings.

          • 0 avatar
            doctor olds

            @PCH101- “Reading between the lines, the lawyer leaked this information in order to bolster his case against the dealership. The blowback that has come from this will almost certainly increase the chance of an out-of-court settlement and the amount of the payout.”
            You are on the money!

            This incident seems particularly unlikely to have been “caused” by the ignition switch. The police said she was driving too fast for conditions and lost control of the car. Inadvertently turning the ignition off doesn’t make a car go out of control. It will still steer and brake.

  • avatar
    Pig_Iron

    GM should do the right thing and stand behind its products. Period.

  • avatar
    CapVandal

    ” the automaker paid $601 million in 2012 for liability claims, according to a filing with the Securities and Exchange Commission.”

    This is their accrual for product liability in 2012. It is $690 million as of December 2013. The amount paid isn’t broken out in the financial statements. (The accrual is their estimate of their cost of all future product liability claims for cars built forever up to the end of 2013). This accrual or estimate increased $89 million during 2013.

    The earnings impact is the the $89 million (plus whatever they paid).

    Anyone wanting more of the gory details — feel free to pour through their financial statements. It’s all in their 10K.

    Including a lengthy list of ‘Risk Factors’ — I liked this one:

    “We operate in a highly competitive industry that has excess manufacturing capacity and attempts by our competitors to sell more vehicles could have a significant negative effect on our vehicle pricing, market share and operating results.”

    Considering that they have revenues of $150 billion, their cost for product liability more or less rounds to zero.

    Anyone with a different opinion .. feel free to dig in to their 10k.

    • 0 avatar
      doctor olds

      @CapVandal- You summarized it very well. I wouldn’t have responded to HDC if I had read your post.

      I recall, many years ago, an informational session where we learned that Oldsmobile expected to pay out about 10% of the lawsuits filed. The budget was $900,000 for a business with 1,000,000 sales a year.

      The image hit is far, far more damaging than the cost impact of these sorts of things.

  • avatar
    DenverMike

    Legal liability or no, GM needs to make it right with these victims and or families. Otherwise GM is just putting a pox on themselves. The can’t keep screwing over Americans just because they can. It’s too competitive out there.

  • avatar
    CapVandal

    There is definitely repetitional risk with this.

    Marry Berra is smart to get this behind her. Right now, she can blame the prior guys. In a year or two, she will own it.

    Getting in front of it to get it behind her and GM is also smart because it wasn’t going to go away — so why not appear proactive? Or be proactive (don’t want to sound overly cynical here).

    The first rule of management after getting control is to ‘clear the decks’ of existing problems and blame the last guy. I’m sure there are other things she would like to clear up, but GM can’t afford them. After 6 months or a year, she will own the problems. You only get a brief honeymoon period to blame the last guys.

    This was one of Jeff Imemelt’s problems @ GE. Jack Welsh was taking victory laps and just had a new book out. Immelt wasn’t in a position to seriously miss earnings, fix the obvious problems, and blame Jack. Immelt became CEO on September 10, 2001. If there was ever a time to throw in the kitchen sink (on the financials) — it was then. Jeff still reminds people of his start date.


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  • Marcelo De Vasconcellos, Brazil
  • Vojta Dobes, Czech Republic
  • Matthias Gasnier, Australia
  • W. Christian 'Mental' Ward, Abu Dhabi
  • Mark Stevenson, Canada
  • Cameron Aubernon, United States
  • J Emerson, United States