The Truth About Cars » lawsuits The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Tue, 29 Jul 2014 17:28:43 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » lawsuits Barra Returns To Face Congress Post-Valukas Report Thu, 19 Jun 2014 10:00:26 +0000 Barra and Valukas are sworn in before House Energy and Commerce Oversight and Investigations Subcommittee hearing on Capitol Hill

In today’s digest: General Motors CEO Mary Barra returns to the Beltway with Anton Valukas in tow; GM is hit with a $10 billion lawsuit; affected families appear before Barra’s testimony; and a safety group calls the Valukas report “flawed.”

Automotive News reports Barra made good on her promise to return to Capitol Hill for a second round of Congressional hearings over the February 2014 ignition switch recall that has upended the automaker for the time being. During Wednesday’s hearing before the U.S. House Energy and Commerce Committee, she proclaimed any unexpected vehicle shutdown to now be considered a safety concern by the automaker, instead of waiting until a clear link surfaced on its own prior to action. The hearing also revealed just how much more work awaits GM in overhauling its corporate culture for the better of all, recounting a report made by an employee in 2005 about ignition switch issues in the 2006 Chevrolet Impala similar to those in the Cobalt. However, it would take until this week for a “big recall” of the mid-size sedan over the issue to occur due to the company’s widespread safety deficiencies.

Later in the hearing, former U.S. attorney Anton Valukas, hired by GM to conduct an independent internal investigation into the recall, took questions about his report. Valukas stated that while he had unfettered access to the automaker, getting through to supplier Delphi and trial lawyers leading cases against GM was easier said than done. Barra then had words about Ray DeGiorgio, the former GM engineer named repeatedly in the Valukas report for his approval of the original switch and its undocumented redesign. In short, she didn’t find DeGiorgio “credible” regarding his statements to Valukas’ team of investigators.

Finally, Barra addressed the issue of compensation for the families affected by the original recall, stating victim-compensation expert Kenneth Feinberg would have total control of the fund, and that GM will have no cap on compensation:

We want to capture every single person who suffered serious injury or lost a loved one — every single one. If the ignition switch was part of the issue, we want them in the program. We want to get everybody that’s affected.

Reuters reports GM is now under the gun of a $10 billion lawsuit filed by Hagens Berman Sobal Shapiro in federal court in Riverside, Calif. on behalf of Anna Andrews. The lawsuit calls for compensation due to lost resale value for those who owned or leased a GM vehicle between July 10, 2009 and April 1, 2014; Andrews herself claimed she would have not purchased her used 2010 Buick LaCrosse — or would have opted for a lower price — “had GM done a better job of disclosing vehicle defects.” Should all come to pass, some 15 million GM customers would receive damages whether their vehicles were recalled or not.

Detroit Free Press says the families affected by the defective switch at the heart of the February 2014 recall made an appearance alongside U.S. Senator Richard Blumenthal of Connecticut prior to Wednesday’s hearing to help others who may have been harmed by products not under recall, and to call for quicker issuing of recalls of flawed vehicles. The families shared stories of how GM’s negligence destroyed the lives of not only those behind the wheel of the vehicles with the defect, but their lives as well. Blumenthal added that “the victims who settled should be given the opportunity to recontest their claims.”

Finally, Center for Auto Safety director Clarence Ditlow penned a letter to Valukas, stating the attorney had accepted the automaker’s defense “that its engineers and senior managers did not know” stalling in vehicles was a major safety issue, to the detriment of his report. He added that the Valukas report had omitted or missed evidence “in constructing what amounts to a corporate defense against criminal charges… that show GM at its highest levels of management considers stalling to be a safety defect.” The report said officials did not consider stalling issues in the Cobalt or Saturn Ion as a hazard until the issue was linked to the failed deployment of air bags due to a loss of power prior to an accident.

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Nine States Investigate GM Ignition Switch Recall Fri, 13 Jun 2014 11:00:28 +0000 Rencen. Picture courtesy GM

In today’s General Motors digest: Nine states are investigating the handling of the automaker’s ignition switch recall; compensation will only focus on those injured or killed; a Georgia injury claim’s transfer to New York a sign of things to come for similar claims; and a federal official saw GM’s corporate culture at work during bankruptcy proceedings, yet remained silent.

Bloomberg reports attorneys general in Arkansas, Connecticut, Florida, Illinois, Indiana, Iowa, Kentucky, Louisiana and Utah are all leading investigations into the February 2014 GM ignition switch recall in an effort address concerns among their constituents over their affected vehicles. Unlike the federal prosecutors in New York — who are conducting their own investigation into the recall — the attorneys general are able to make decisions faster, former Maine Attorney General Jim Tierney citing individuality as the key to quick decisions. As for potential fraud and negligence allegations, Tierney expects those questions will be answered “down the road,” the main focus of the AGs being to let GM know “they’re on the case and they’re paying attention.”

Within GM, The Detroit News says on the same day CEO Mary Barra announced she and independent investigator Anton Valukas would be heading up to Capitol Hill for a promised return to Congress, victim-compensation expert Kenneth Feinberg clarified that the fund he is designing for GM will only pay those affected by injury or death as a result of the recalled out-of-spec ignition switch found in 2.6 million vehicles; the switch is currently linked to 13 fatalities and 54 accidents. Though he has yet to determine the specifics on those to be compensated, Feinberg “will not include economic loss claims for e.g. ‘perceived diminished value.’” Those who are suing for such claims — over 70 plaintiffs — will instead meet before U.S. District Judge Jesse Furman in New York, where the automaker hopes the liability shield established upon exit from bankruptcy in 2009 will prevent those cases from moving further.

Speaking of New York, Bloomberg adds the injury lawsuit filed by Georgia attorney Lance Cooper and Alabama lawyer Jere Beasley on behalf of the family of Brooke Melton — who originally settled with GM last September prior to the recall — will likely join the economic value-related suits in New York instead of being considered for compensation. GM representative Kevin Kelly stated that any injury claim, no matter the timing, “would be subject to [Kenneth] Feinberg and the protocol he outlines,” though the automaker’s decision regarding the Melton case is, as far as it’s concerned, already settled. The Melton family is suing for damages beyond the federal minimum of $75,000, including “the full value” of their daughter’s life and funeral costs.

Finally, Automotive News reports a New York Times op-ed penned by Steven Rattner, who led the federal financial bailout of GM and Chrysler, recounted the first-hand knowledge of GM’s corporate culture at work in 2009. Rattner’s experience with the culture was as follows:

Looking under the hood of GM was the most stunningly disappointing dissection of a paid-up member of corporate America in my 30-year Wall Street career.

However, while he believed then-CEO Rick Wagoner left a lot to be desired on the corporate responsibility front — in comparison with Ford CEO Alan Mullaly — Rattner did not believe the overall senior management was at-fault for the ignition switch whose problems were years away from exploding into the spotlight.

Two safety advocates took issue with the op-ed: Care for Crash Victims auto safety research Louis Lombardo questioned Rattner’s decision to report on the culture, yet not investigate further into GM or the National Highway Traffic Safety Administration beyond the bottom line; and former agency head Joan Claybrook stated his account as lacking clarity, “encouraging [GM] to have a wink, a nod and a salute” over liability concerns.

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Feinberg: A Modest Window To File Recall-Related Claims Thu, 12 Jun 2014 13:00:30 +0000 File photo of General Motors logo outside its headquarters at the Renaissance Center in Detroit

Bloomberg reports the compensation fund designed by attorney Kenneth Feinberg for General Motors will have “a relatively modest timetable to invite claimants to file their claims” once the claim period begins August 1. Feinberg also said by the end of June, he and his team will have a program “that will define who’s eligible to file a claim… what the dollars will look like for those who file,” as well as the obligations the plaintiffs will need to have “to prove their claim.” GM CEO Mary Barra added that her company won’t know the final cost of the fund “until the actual compensation has been run,” though an estimate may come at the end of Q2 2014.

On the other end of the scale, The Detroit News reports the automaker has come into full compliance with the National Highway Traffic Safety Administration in the agency’s request for documentation about the recall, bringing an end to the $7,000/day fine put in place for non-compliance. The total penalty paid to the NHTSA will come to $420,000 from the time the clock began on April 4 — after the automaker failed to answer in full by the previous day the 107-question survey to sort out the recall’s handling — through June 5, the day the Valukas Report was published and distributed to all concerned parties. The fine is in addition to the $35 million maximum fine levied upon GM for the decade-plus delay prior to recalling the out-of-spec ignition switch at the heart of the matter, and is due by July 4; the $35 million fine is due this Friday.

Meanwhile, Georgia lawyers Lance Cooper and Jere Beasley claimed in a statement that GM is attempting to move the nearly reopened wrongful death lawsuit on behalf of the family of Brooke Melton to bankruptcy court in New York in an effort to use the liability shield established in the automaker’s exit from bankruptcy in 2009 to deflect the new claim. Melton’s family had accepted a settlement in September 2013 under allegations her 2010 fatal accident behind the wheel of a 2005 Chevrolet Cobalt was the result of the defective switch on-board, one of 13 total fatalities so linked thus far. Alleging GM hid evidence in bankruptcy, Cooper and Beasley filed a lawsuit last month to reopen the case and set aside the settlement.

Finally, Autoblog reports GM has filed a trademark claim with the United States Patent and Trademark Office to reserve the name Zora for “motor land vehicles, namely, automobiles.” The name is part of the automaker’s heritage, as Zora Arkus-Duntov helped take the Chevrolet Corvette from a low-powered roadster with European flair, to a fire-breathing beast on the track and in the showroom through the car’s first two generations. The publication speculates the name could be used on a special edition Corvette somewhere down the road, especially if linked to a Grand Sport model; Arkus-Duntov led the Grand Sport program that established the Corvette as a racing legend during the C2 era.

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US Judicial Panel Consolidates Lawsuits, Sends Them To NY Tue, 10 Jun 2014 13:00:02 +0000 RenCen1

Reuters reports the lawsuits filed against General Motors over its decade-plus handling of the ignition switched linked to 13 fatalities and 54 accidents will all be reviewed by U.S. District Judge Jesse Furman in the Southern District of New York, as ruled Monday by the U.S. Judicial Panel on Multidistrict Litigation. The panel determined New York to be the appropriate venue for the hearings based upon the court’s handling of the 2009 bankruptcy that allowed the automaker to shed its former self, liabilities and all. The lawsuits to be heard by the bankruptcy judge involve economic damages, suits GM wants the judge to determine if they are blocked by the liability protections established upon its exit from bankruptcy.

KARE-TV reports one of the families affected by the recall expressed their outrage at the automaker’s decision to include their daughter’s friend among the 13 who lost their lives, but not their daughter, who died with her friend. Ken and Jayne Rimer believe their daughter, Natasha Weigel, had been sitting in the back of the Chevrolet Cobalt behind her friend Amy Rademaker, had not been counted because Weigel was not in front of an airbag when the vehicle smashed through several trees in 2006. The Rimers also doubted CEO Mary Barra’s sincerity when they spoke to her about Natasha, Jayne claiming Barra’s tears to be “staged.” The family is demanding to know why Weigel was left out of the fatality count, but did not state how they would go about obtaining said information.

In Detroit, Automotive News reports other families affected by the recall are planning to protest outside of the annual GM shareholders meeting Tuesday. Monday, protesters gathered at the Renaissance Center to let their voice be heard by all who would hear, including the live cameras of CNBC. Around 20 are expected to protest the shareholders meeting beginning at 9:30 a.m.

Meanwhile, three more names were revealed from the list of 15 who were fired by GM last week after the Valukas report was published:

  • Jaclyn Palmer: Attorney
  • Ronald Porter: Attorney
  • Maureen Foley-Gardner: Director of field performance evaluation

A total of 11 names have been revealed as of this writing, including former GM engineer Ray DeGiorgio, which said report laid the majority of the blame for the ignition switch upon. The 325-page report mentions DeGiorgio by name 207 times, including in the opening sentence of the report itself. Attorney Anton Valukas, hired by GM to conduct the investigation that bears his name, says of the former engineer:

He actually changed the ignition switch to solve the problem in later model years of the Cobalt, but failed to document it, told no one, and claimed to remember nothing about the change.

Valukas added DeGiorgio’s decision to solve the problem but not to document the change was “deliberate” and “an act that violated GM’s policies and which would throw GM investigators off the track for years.”

Finally, The Detroit News reports the GM Board of Directors are well aware of the recall issues, but are not happy with the associated headache. Chair Tim Solso says he and his board members have faith in Barra and her executive team, but is looking to push forward with improving the corporate culture at the root of the recall with “high-performance teams and quality leadership… in the right jobs… aligned around guiding principles, vision, values and strategy.” Solso adds the crisis has brought the leadership together, with GM becoming more transparent and focused on its customer base.

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Feinberg: Report On GM Victims Compensation “Weeks Away” Wed, 04 Jun 2014 12:00:13 +0000 Kenneth Feinberg

The Detroit News reports Kenneth Feinberg, whose services were retained by General Motors regarding compensation for victims of the out-of-spec ignition switch linked to 47 accidents and at least 13 fatalities, stated an announcement regarding compensation is “a few weeks away.” Feinberg adds that while his client may be making its own statement on the matter, “it will not include any details about a compensation plan since no such plan yet exists.” The attorney has worked on similar programs in the past, including those affected by the 2011 BP/Deepwater Horizon disaster, Agent Orange, asbestos and the attacks in New York, Pennsylvania and Washington, D.C. in early September of 2001.

The Detroit Free Presswho has a comprehensive timeline of surrounding the issues that has placed GM under the spotlightcombed through an organization chart and other findings obtained from the Associated Press to illustrate how a small problem became the ongoing headache currently experienced by the automaker. Of note, until earlier this year, safety came in fourth to finance, sales and PR, reflecting CEO Mary Barra’s statement before Congress in April that GM’s corporate culture valued cost savings over the safety of its consumer base. The corporate structure could come under more fire once independent investigator Anton Valukas presents his findings to Barra this week, with a potential recommendation to tear down the “communication silos” so that future issues — and the ability to act upon them — are allowed faster access to the top.

Over in the Beltway, the National Highway Traffic Safety Administration is facing its own time under the spotlight for its part in handling the February 2014 GM ignition switch recall. Though consumer advocacy groups and the federal government have suggested ways to help the agency better do its job — from boosting its maximum fine to $300 million from $35 million, to increasing manpower and oversight over the automotive industry — the main sticking point is the NHTSA’s reliance on self-reporting of recalls et al by the automakers, which is partly the result of the former’s focus on driver safety over safety defects. The self-reporting protocol broke down between both GM and the agency, leading to the recall parade being led by the former, and future improvements of the reporting process and beyond for the latter.

Finally, Automotive News reports Nettleton Auto Sales Inc., a used car dealership in Jonesboro, Ark., is suing GM for being stuck with inventory it cannot sell because said inventory contains “highly dangerous vehicles” that may or may not be affected by the main February 2014 recall. The suit, filed in U.S. District Court in Little Rock over a week ago and disclosed by GM in bankruptcy court this week, says the automaker “actively” concealed the out-of-spec part until this year. The vehicles named in the suit total three thus far — all Chevrolet HHRs — with additional vehicles to be named later.

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Akerson Claims No Knowledge Of Ignition Switch Issues During GM Tenure Mon, 02 Jun 2014 12:00:22 +0000 GM-CEO-Dan-Akerson-at-New-York-Stock-Exchange

Last week, the B&B learned from former General Motors CEO Dan Akerson that current CEO Mary Barra did not know about the ignition switch that has since given his old company a months-long headache. The B&B then asked if Akerson himself knew of the problem on his way to be at his wife’s side and that of his colleagues at The Carlyle Group.

Automotive News reports the answer is “No.” In a post on Forbes magazine’s blog, both he and GM chair Tim Solso claim they didn’t know about the ignition switch issues at the heart of the February 2014 recall of 2.6 million vehicles. Akerson stated that if he had known about the problem, Barra would have been made aware as he handed the reins of the automaker to her in late December 2013. Solso says he didn’t become aware until after Barra called him to let him know the bad news, having become a non-voting member of the board in the following January.

On the judicial front, Bloomberg says GM wants the U.S. District Court for the Southern District of New York to handle every lawsuit related to the ignition switch recall, citing that the federal judge in Manhattan would be able to confer with U.S. Bankruptcy Judge Robert Gerber — who handled the 2009 bankruptcy that separated the automaker from its old assets — throughout the litigation process. The request, made before the seven-member U.S. Judicial Panel on Multidistrict Litigation in Chicago, was met with resistance by the 14 lawyers also in attendance. The group protested the idea that proximity to GM’s favored bankruptcy judge would be a benefit to their clients, with Rudy Gonzales of Corpus Christi, Texas firm Hilliard Munoz Gonzales LLP suggesting the district court in Texas would be the better venue.

Within the Beltway, GM asked another federal judge to keep confidential information related to its bankruptcy out of the hands of the Center for Auto Safety, who sued the U.S. Treasury in 2011 under the Freedom of Information Act for the records detailing where and how everything went wrong in the handling of the out-of-spec ignition switch. The automaker claims that it has a right to protect its “interests in its own business information” that it says goes above and beyond what it thinks the consumer-advocacy group has a right to request from it and the Treasury.

Finally, Automotive News reports Anton Valukas, the former U.S. attorney hired by GM to independently investigate the recall, has given his findings to the automaker for presentation this week. Barra reportedly informed Congress in April that she gave Valukas “free rein” to hunt down what he needed without roadblocks in the way. As a result, a number of questions regarding information suppression, collusion, and who knew what and when during the decade-plus period surrounding the switch will likely be answered in the lead-up to victim compensation, which is headed by attorney Kenneth Feinberg. The report itself could be in the size and scope of his report on the collapse of Lehman Brothers in 2008, which came in at 2,200 pages.

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Endless GM Recall Parade Sign Of Industry-Wide Action To Come Thu, 22 May 2014 10:00:56 +0000 GM RenCen Storm Clouds

Detroit Free Press posits the endless recall parade General Motors has been leading since late February 2014 may be doing more harm than good for public perception or its bottom line. Though spokesman Greg Martin claimed the recalls were an effort to make his employer “a first-class safety organization” by focusing hard upon the consumer, a survey by AutoTrader found 51 percent of auto consumers were less confident in the industry’s overall safety record as a result of the actions by GM, up from 44 percent who thought the same five days’ earlier. In addition, the automaker will take a $400 million charge in Q2 2014 for the recalls since April 1 as of this writing, while its current stock price of $33.07 per share is a few cents above its IPO price from November 2010.

Autoblog continues on this thread, proclaiming what GM is doing is the beginning of an industry-wide shift toward issuing full recalls for any flaw in a given product, all under heightened scrutiny from the public and government regulators. For the first months of this year alone, all automakers have recalled a total of 22.4 million vehicles, the bulk of which belong to GM. Kelly Blue Book analyst Akshay Anand says the parade is a double-edge sword, particularly for the General; while such recalls are a sign automakers are being proactive in ensuring their products are as safe as they can be, consumers may perceive the effort as a sign automakers are failing to do their job well in the first place.

Automotive News follows with Fiat Chrysler Automobiles CEO Sergio Marchionne, who stated in a panel discussion at the Brookings Institute this week what else might occur when the GM-led parade becomes a permanent fixture in the industry:

If effectively this frequency of recalls becomes a norm, if everybody starts doing this, then I think you will see this cost being shifted to the consumer. It will transfer itself over onto the selling price of the vehicle.

Marchionne adds automakers, in turn, will act more sensibly in handling potential defects in product, noting punitive actions — such as paying $35 million in fines to the National Highway Traffic Safety Administration — will have little in the way of such handling when reputation is the bigger issue for the industry as a whole.

Speaking of the main parade itself, Autoblog reports 218,000 2004 through 2008 Chevrolet Aveos have been recalled due to the daytime running light module in the instrument panel possibly overheating, melting and setting the vehicle ablaze. According to spokesman Alan Adler, the automaker is “aware of some fires” so far, and is working on a fix for the module. Adler adds that while he doesn’t know when the fix will come, GM will send a second notice to owners when the time comes to schedule repair work.

Detroit Free Press concludes by explaining why GM continues to issue recalls as it combs through its records to avoid another decade-long delay in taking such action:

  • The government has ordered the automaker to meet with the NHTSA monthly on investigations and recalls as part of the former’s $35 million settlement with the latter
  • GM CEO Mary Barra’s appointment of Jeff Boyer to global quality chief — with the mandate to report directly to her if necessary — means anything deemed dangerous or otherwise unknown, including previously unreported defects — are up for attention
  • The automaker’s investors prefer to get the bad news out of the way and accept whatever potential pain awaits in as few quarters as possible, even if no one is happy about swallowing such medicine in the first place

The Freep also provided a list of every recall from January through this week, minus the latest recall issued Wednesday; total recall to date is 18,666,842.


On the sales front, Automotive News reports dealers won’t be able to sell any of the 2009 through 2014 Chevrolet Traverse, Buick Enclave and GMC Acadia crossovers thanks to a stop-sale order issued in a recall involving the front seat belt cable in the vehicles. The order comes during one of the biggest sales weekends of the year, putting a damper on potential Memorial Day promotions. Though dealers could still close on sales without actually allowing the vehicle to leave the lot, no test drives can be carried out in affected demonstrators, making such sales more difficult. GM is offering an end-of-month incentive to maintain May sales momentum, but that may not be enough to offset the extra floorplanning costs if few vehicles can be sold until the affected units are repaired.

Back in the Beltway, Barra met with U.S. Senator Claire McCaskill of Missouri and other members of Congress to discuss recent findings in the February 2014 ignition switch recall. Though spokesman Greg Martin confirmed the meetings did take place, he did not give details on all that was said between Congress and the CEO.

Meanwhile, members of the Obama administration who helped assemble the rescue packages for both Chrysler and GM said they knew nothing about the out-of-spec switch at the heart of the recall maelstrom when said packages were crafted between them and the automaker’s senior execs. One member, Harry Wilson, stated that even if the task force asked GM point-blank about the switch, he doubted they would ever get a straight answer. Lead adviser Steven Rattner added that as far as he knew, the execs before him then didn’t know about the problem; therefore, neither could his task force.

Over in Texas, Bloomberg both GM and supplier Delphi have asked the Texas Supreme Court to combine four suits linked to the switch into one state case. The claim is fighting each one separately would cost the duo time and money, while combining the four and rolling subsequent cases going forward into a single case would “eliminate duplicative discovery, void conflicting pretrial rulings, conserve judicial resources, be more convenient for the parties and witnesses and otherwise promote a more just and efficient conduct of this litigation.” The cases mention involve wrongful injury and death.

With GM’s cadre of lawyers coming under the gun now, Detroit Free Press reports the automaker’s general counsel Michael Millikin has named attorney Lucy Clark Doughtery to advise Boyer and product development chief Mark Reuss. Millikin is also working with independent lawyer Anton Valukas on the internal investigation into why GM handled the recall the way it had. The general counsel’s own future with the company has been called into question, though GM claims Millikin has no “current plans to retire” at this time.

In financial news, Automotive News says GM Financial is preparing to go under its own test of scrutiny of loans originated by its dealership network in an effort to avoid punitive action by the Consumer Financial Protection Bureau based on allegations of discrimination in lending rates among minority consumers. The lender’s chief compliance officer, Dan Bickmore, says his role is to help reorganize the company into compliance with the CFPB, going as far as to establish a new compliance department and boosting the lender’s complaint management process and fair lending areas. He also aims to help educate dealerships on appropriate lending policies to prevent discrimination of protected classes when drafting a loan or lease contract.

On the design front, global design chief Ed Welburn says that with GM’s line of vehicles sharing the same technology and functionality with each other, styling will be needed to help differentiate each unit. He goes on to say the automaker has committed a few design sins in the past, favoring functionality over style and charm, as well as decontenting interiors when a product was overbudget. Welburn concludes that the new guard leading GM “really cares about interiors now, and it shows,” such as the interiors in the 2014 Chevrolet Corvette and Cadillac ELR.

Finally, The Detroit News says the 2015 GMC Sierra All Terrain HD will go on sale this summer. The pickup will be available in 2500 and 3500 weight classes with double and crew cab options, with trim lines to include SLE, SLT and Z71. Power is expected to come from a standard 6-liter gasoline engine, with a twin-turbo Duramax diesel on the options list.

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GM Ready To Introduce Seat-Belt Interlock System In Select 2015 Models Wed, 21 May 2014 10:00:11 +0000 GM and OnStar Aim to Help Buckle Up America

Automotive News reports General Motors is preparing to launch a belt assurance system in a number of MY 2015 vehicles later this year, including the GMC Sierra, Chevrolet Cruze, Colorado and Silverado. The system prevents the vehicle from shifting out of park until both driver and front passenger are buckled, using weight information gathered from the sensing and diagnostic module to lock the brakes and transmission until compliance is achieved. The system is currently optional, and will be provided free of charge for those who are willing to become beta testers for GM’s latest technological offering.

The Detroit News reports the company is facing down 79 lawsuits linked to the February 2014 ignition switch recall, with plaintiffs asking for as much as $10 billion in lost resale value. Some of the lawsuits are aimed at tying “New GM” to “Old GM” by dissolving the liability protections established in July 2009 when the automaker exited bankruptcy, leaving behind responsibility for accidents linked to the out-of-spec switch that occurred before “New GM” emerged. Supplier Delphi is also named as defendant in a number of the suits for their part in manufacturing the switch. All of the lawsuits are currently on hold by federal judges in California and Texas pending ruling on which of the claims will be allowable.

Meanwhile, the fallout from the February recall may upend the U.S. automotive industry as a whole, especially in its relationship with the federal government. GM’s credibility, already perceived as lacking among the public, isn’t being helped with the hiring of “Old GM” executives, the retirement of engineers with ties to the switch, or the status quo maintained in the automaker’s legal department. As the spotlight shines brighter on GM’s problems, it will likely face the same sledgehammer used by the U.S. Justice Department when the latter levied a $1.2 billion settlement upon Toyota for its own recall issues. In turn, more recalls, cautious product development and reduced profits will be experienced by all automakers, while consumers may see satisfaction from the heightened scrutiny.

Finally, Edmunds says GM and Google are partnering for ride-share pilot program at the latter’s Mountain View, Calif. campus, featuring the 2015 Chevrolet Spark EV as the vehicle of choice. The EV was chosen thanks to its “small footprint” along with its ability to seat four while cornering past the ARCO and connecting with the Google mothership. GM says the program will combine “commuting data, analytics, telematics, navigation and smartphones to run a smart, real-time system that mixes and matches drivers, riders and cars during morning and evening commutes,” with convenient door-to-door service and flex-scheduling the main goals expected.

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Former GM PR Exec Steve Harris Returns Under Ignition Recall Fallout Fri, 09 May 2014 10:20:33 +0000 harris

(Note: header image changed based on whim of E-I-C pro tem, some will understand why — JB)

Detroit Free Press reports former General Motors vice president of communications Steve Harris has been called out of retirement to help guide his former employer through the fallout of the February 2014 ignition recall crisis “for a limited time.” According to spokesman Greg Martin, Harris’ “deep background with GM and proven experience” will be of great benefit to the company. His second return the company — the first in 2006 at the request of then-CEO Rick Wagoner after leaving in 2003 — comes on the heels of successor Selim Bingol’s resignation in April of this year.

Regarding the switch itself, Autoblog reports testing of the recommended temporary fix — using the key with nothing attached — conducted by both the automaker and the U.S. Department of Transportation have shown the cars can be driven safely as-is. In addition, Secretary of Transportation Anthony Foxx responded to the call by Senators Edward Markey of Massachusetts and Richard Blumenthal of Connecticut to order GM to pull the 2.6 million affected vehicles off the road until they are repaired, stating that “such an action is not necessary at this time,” and that the National Highway Traffic Safety Administration “is satisfied” with the temporary solution proposed by GM.

In lawsuit news, Automotive News reports the automaker is seeking shelter from a group of customers seeking information on its handling of the ongoing recall in a federal court in Texas. The judge reviewing the 60 suits against the company has stated he would consider such requests from the plaintiffs while deciding if their demands are lawful, while GM says such evidence should be “scheduled in a coordinated fashion” after consolidation of all suits pending.

Finally, GM, its dealers, and its customer base may have to traverse a long, hard road out of hell before everything settles down around the main recall and subsequent recalls that have come over the past few months. Detroit Free Press says the automaker will need 9 million parts from its suppliers — from new ignitions to power steering motors — and several months to repair all affected vehicles dropped off at its 4,300-strong dealership network. The wait alone for parts to arrive may take as much as four weeks to arrive for some dealers, as Delphi and other suppliers are ramping up production to meet demand.

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GM Issues ECM Recall, Bids Farewell To Federico Tue, 06 May 2014 10:00:49 +0000 2014 Buick Enclave Exterior, Picture Courtesy of Alex L. Dykes

Autoblog reports another recall has been issued by General Motors, this time concerning 51,640 2014 Buick Enclave, Chevrolet Traverse and GMC Acadia crossovers screwed together between March 26 and August 15 of last year. The affected vehicles possess an engine control module whose software may provide an inaccurate fuel gauge reading, forcing the driver to pull to the side of the road should the tank prove empty instead of a quarter to empty. Owners have been asked to bring their affected crossover for a reflashing of the ECM to correct the issue.

As for the original recall, Automotive News reports GM engineering executive Jim Federico has retired from the company. Federico led a team of engineers in a 2012 investigation of the out-of-spec switch at the heart of the recall, specifically on whether an increase in the switch’s torque would prevent it from slipping out of the “on” position, as well as why the switch prevented sensors in affected vehicles from deploying during a crash. The engineer, who reported directly to current CEO Mary Barra in 2011 when she was global product development chief, had a hand in the development of a handful of vehicles, including the Chevrolet Volt, Opel Adam and Buick Regal. A GM spokesman said Federico’s immediate retirement is not related to the ongoing recall crisis.

Meanwhile, the publication put forth a timeline involving engineer Ray DeGiorgio’s original decision to make no changes to the switch, and his subsequent about-face months later that ultimately led to the introduction of the redesigned switch in late April 2006. In short, the atmosphere tied to the company’s “cost culture,” when paired with the financial downward spiral that led to both GM and supplier Delphi seeking emergency funding from the federal government in 2008, gave rise to DeGiorgio — responsible for the switch’s design since 1999 — originally seeing the upgrade as impossible due to the design’s fragility possibly leading to more problems in a redesign. Other proposed solutions were deemed as an unacceptable business case by Chevrolet Cobalt engineering manager Gary Altman, who discovered the problem by accidentally bumping his knee against the switch in testing. Later on, DeGiorgio sought more data into the problem despite his original verdict, working with Delphi to create the upgraded part.

The Detroit News reports the law firms of Beasley, Allen, Crow, Methvin, Portis & Miles P.C. in Montgomery, Ala. and the Cooper Firm in Marietta, Ga. are joining forces to handle 200 product liability lawsuits against GM in addition to the lawsuits already filed by the firms separately. Founding shareholder of Beasley Allen et al, Jere Beasley, proclaimed the unification necessary in order to “help GM’s victims take on the powerful automaker.” Cooper’s namesake Lance Cooper added that not only will the joint venture benefit their clients, but it will also “allow us to continue in our efforts to get at the truth of what GM knew and when they knew it, so that the American public gets answers to their questions.”

Over in Korea, Automotive News reports GM Korea is devising strategies in the wake of Chevrolet’s 2016 European and Holden’s 2017 manufacturing exits. Aside from its newly expanded design studio, the subsidiary has reduced total daily work hours from 20 to 16, which would cut annual production by 100,000 units while offsetting 150,000 lost annual sales from Europe. Other cuts include early retirement for salaried employees — 200 of 6,000 eligible having accepted thus far — and 60,000 units at GM Korea’s Gunsan plant, where the Cruze and Orlando are assembled. In return, more vehicles could be sent to Australia and other markets from Korea in place of those once manufactured in Australia come 2017 and beyond.

Finally, GM has opted to simplify its customer satisfaction survey in order to gain knowledge from its base faster. The new survey, currently in the pilot phase, is comprised of less than 10 questions, and will ask consumers to rate their dealership experience on a scale of one to five stars, as well as write an online review. If successful, the original 22-question survey would be replaced by the shorter version, both of which are used to award quarterly payouts for dealers under the GM Standards for Excellence program.

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GM Begins Ignition Lawsuit Talks, US Bankruptcy Court Press For Settlement Mon, 05 May 2014 11:00:28 +0000 GM

Automotive News reports General Motors’ attorney Kenneth Feinberg met with Texas attorney Robert Hilliard at the former’s office within the Beltway to begin preliminary discussions over the claims of the latter’s 300-plus clients affected by the ignition switch recall. During the talk, no agreements were reached regarding compensation, while Hilliard viewing the first meeting as GM’s way of convincing him that it would do “the right thing” by his clients. Feinberg states he is gathering proposals for a compensation program similar to the one he orchestrated for 9/11 victims and victims of other major disasters, and should have a package ready within the next few weeks at the latest.

Meanwhile, U.S. Bankruptcy Judge Robert Gerber urged GM to settle with plaintiffs seeking compensation from the recall, proclaiming:

Frankly, it would be great if whatever money is available for injured people could go to them, and not to litigation costs and attorneys’ fees.

The viewpoint held by Gerber comes from his partial reading of 3,500 pages related to claims filed in the 10 days prior to his pronouncement. Currently, 59 lawsuits with a price tag of $10 billion in damages have been levied against the automaker, with one group refraining from suing at the automaker’s request until the judge validates their complaints sometime before the end of July. In the meantime, a separate hearing May 29 will devise a strategy to centralize the suits before GM; Gerber said he would stay out of the way for the hearing.

In other news, GM is holding back on huge dealer orders for its large SUVs and pickups due to over two dozen supply constraints regarding V8 engines, four-wheel drive systems and other components, affecting availability for the 2014 Chevrolet Silverado and 2015 Suburban and Tahoe. The constraints are frustrating for dealers in light of the popularity of the vehicles, with the automaker urging creativity to get around the supply issues, which could take as long as four weeks to resolve. Despite this, transaction prices of GM’s newly redesigned offerings netted $700 million in pretax profit for Q1 2014, while the Silverado/Sierra twins delivered a 37.7 percent haul of overall sales of all pickups sold for $40,000 and above in the same period.

Finally, CEO Mary Barra delivered the commencement speech at the University of Michigan over the weekend, as well as received an honorary degree in engineering. The university’s decision to invite Barra came under fire from two student groups, citing the recall crisis and the alleged dismissals of injured employees at a GM plant in Columbia as not representative of the university’s values behind their reasoning. As for Barra, though she did not directly bring up the recall in her speech — opting to speak about the future and all it will offer — she did offer these words of wisdom for the Class of 2014:

Remember that hope is not a strategy. Problems don’t go away when you ignore them — they tend to get bigger.

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Dodd-Frank Act Used In NY State Subprime Lender Lawsuit Thu, 24 Apr 2014 13:15:27 +0000 President Obama Signs Finance Reform Bill Into Law

The Dodd-Frank Act, created in the wake of the Great Recession as means to curb the practices by financial corporations that led to the Great Recession in the first place, is now being used to go after an automotive lending company in New York for stealing from its customers.

The New York Times reports New York Superintendent of Financial Services Benjamin Lawsky filed a lawsuit in the U.S. District Court for the Southern District of New York against Long Island-based subprime auto lender Condor Capital Corporation for siphoning millions of dollars from its borrowers by way of shutting out borrowers once a loan had been repaid, preventing them from discovering if any excess funds were still in the account upon full repayment.

Further, Condor’s method of storing personal account information left a lot to be desired, including unencrypted backup tapes sent to the home of the company’s vice president and “stack of hundreds of hard-copy customer loan files lying around the commons areas” of the company’s offices.

Upon the judge’s decision, a temporary restraining order was issued against Condor, freezing all accounts and operations with the potential for Lawsky to recover the millions lost for his state’s customers, or, should he move the lawsuit to federal court, do the same for all of Condor’s customers in the 30 states where the lender does business.

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GM Saved From ‘Park It Now’ Order, Looks To Strengthen Liability Protections Fri, 18 Apr 2014 14:00:34 +0000 Recalled GM ignition switch

The Detroit News reports U.S. District Judge Nelva Gonzales Ramos delivered a six-page ruling in favor of General Motors, saving the automaker from issuing a “park it now” order that would have proved costly both financially and in reputation. Had the order gone forward, it would have set a precedent that not even the National Highway Traffic Safety Administration could attempt in its limited penalty power. The attorney representing the plaintiffs in the lawsuit for the order, Robert Hilliard, may appeal.

In other legal news, GM has filed a request with the U.S. Bankruptcy Court in San Francisco to prevent lawsuits filed against the automaker in recall-related incidents prior to the 2009 exit from bankruptcy, reinforcing the liability protections established during the bankruptcy proceedings. GM is currently facing 41 separate lawsuits from 19 U.S. district courts, which may be consolidated into a single venue by a judicial panel in the early stages. The bankruptcy court in New York will rule on jurisdiction April 25.

Autoblog reports CEO Mary Barra will create a new group within the company to be headed by vice president of global product development Mark Reuss that will work with vice president of global vehicle safety Jeff Boyer in monitoring new products for potential safety concerns. Barra also addressed the suspension of engineers Gary Altman and Ray DeGiorgio during her 2014 NYIAS eve announcement:

Let me be really clear, these are real people with real careers, and I’m personally dedicated to making sure we have true facts of what happened… We agonized over that decision, but we thought that was the right thing for the individuals and right thing for the company at this time.

The Detroit News adds North America president Alan Bately, speaking before analysts and investors at the 2014 New York Auto Summit during the 2014 New York Auto Show Wednesday, proclaimed his employer was focused on safety, citing the Chevrolet Trax’s standard rearview camera as an example. When asked about the recall and whether money would be set aside to handle warranty and liability claims down the road, however, Bately said that until internal investigator Anton Valakus completed his work, GM wouldn’t have any answers to offer.

Meanwhile, the myriad of documents delivered to Congress and the NHTSA this week threw more fuel to the smoldering recall crisis when it was revealed GM and supplier Delphi redesigned an ignition switch on the Cadillac SRX prior to production in February 2006 after test drivers accidentally bumped the ignition out of power in a manner similar to the switch at the heart of the recall, which didn’t see a redesign until April of the same year. GM added that the expanded recall of 2008 – 2011 vehicles affected by the out-of-spec switch would cost the automaker $40 million, and that 109 vehicles not under the recall may have received the defective part, as well.

Finally, Fortune magazine senior editor-in-chief Allan Sloan posits that Barra was thrown under the bus GM built in the 13 years prior to then-CEO Dan Akerson passing the torch to her late last year. He also suggests that instead of the federal government, the media and the general public taking her to task for everything wrong with GM as of late, blame should be laid at the feet of the correct people involved in setting the stage: Rick Wagoner, Ed Whitacre and Akerson.

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Lemon Law King Sues Tesla In Wisconsin Circuit Court Tue, 08 Apr 2014 13:15:57 +0000 tesla-model-s-09

Wisconsin lawyer and self-proclaimed “Lemon Law King” Vince Megna has filed a lawsuit in Milwaukee County Circuit Court against Tesla under the state’s lemon law.

Green Bay Press Gazette reports the lawsuit, filed on behalf of Robert Montgomery of Franklin, Wisc., takes the automaker to task for failing to refund Montgomery’s $99,515 after his 2013 Model S Performance was in the shop for various issues — including failure to start and inoperable door handles — for over 30 days; Wisconsin’s law requires manufacturers to either replace a defective product under warranty after four attempts in one year to fix a defect, or to refund the affected customer. The refund request was made in November 2013.

Megna told the newspaper that under the lemon law then-in affect when Montgomery purchased his Tesla, his client could receive double damages should the court side in their favor. The lawyer also posted a video on YouTube outlining the case and subsequent filing, with a cameo from a cardboard cutout of famed Tesla owner George Clooney.

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GM Recalls 1.3 Million Additional Vehicles As Barra Heads To D.C. Tue, 01 Apr 2014 10:07:19 +0000 GM

The Detroit News reports General Motors CEO Mary Barra boarded a commercial flight from Detroit to Washington, D.C. Sunday in order to prepare for two separate hearings before Congress regarding her company’s handling of the ongoing 2014 recall crisis. While in the nation’s capital, she also met with 25 family members whose relatives were killed in crashes linked to the ignition switch behind the recall.

CNN Money adds GM is about to reveal the names of the 13 people who lost their lives due to catastrophic failure linked to the defective part. The information will be made available to the public, with sensitive information — corporate secrets and personal data — redacted prior to publication. The information is part of a request by the National Highway Traffic Safety Administration due April 3.

As for what Barra and NHTSA acting administrator David Friedman plan to say before the House and Senate hearings, Automotive News reports Friedman is standing firm on his agency’s effort to “properly carry out its safety mission based on the data available to it and the process it followed” in prepared remarks to the House Energy and Commerce Committee, while Barra reiterates her position on the events leading up to the recall and subsequent actions moving forward:

When we have answers, we will be fully transparent with you, with our regulators and with our customers.

Automotive News also put forth four key issues Barra and Friedman will have to explain before Congress and the general public:

  • How GM’s multiple internal investigations failed to lead to a recall sooner
  • Why NHTSA failed to launch an investigation, despite signs that a faulty switch might be causing airbags not to deploy
  • Whether and how GM’s vehicle-safety protocols have changed
  • Whether GM’s internal processes were violated or laws were broken

Tying into the fourth issue, House Democrats have found and named the engineer behind the 2006 ignition redesign as Ray DeGiorgio, who denied in a 2013 court deposition having knowledge that the part was changed. They also penned a letter to Barra stating the redesigned switch still didn’t meet spec, based on information provided by supplier Delphi confirming the switches meant for 2008 – 2011 models tested poorly alongside the switch approved in 2002 now linked to 13 fatalities and 33 crashes.

Automotive News also posits the reason behind the NHTSA not pushing forward on a recall sooner was due to a heavy focus on child deaths linked to airbags. When GM introduced a smart airbag system in their vehicles in the 2000s, the agency focused on whether or not the airbags were doing their job to protect children placed in the front seat, with the goal of assessing “real world” performance while spotting “unusual circumstances” — such as the flawed ignition switch behind the recall — that would allow for “early identification of potential problems,” according to a 2004 statement by former agency boss Chip Chidester.

In new recall news, GM recalled 1.3 million vehicles made between 2004 and 2010 whose power steering could suddenly lose electric power, with the automaker aware of “some crashes and injuries” tied to the steering. Vehicles affected include: Chevrolet Malibu, Malibu Maxx, non-turbo HHR and Cobalt; Saturn Aura and Ion; and Pontiac G6.

As for reporting issues that could lead to a recall, GM leads the way in filing early-warning reports to the NHTSA with 6,493 reports between 2005 and 2007; Chrysler and Toyota filed around 1,300 in the same period, while Honda filed 290. However, the cause behind the numbers is in how each automaker follows the 2000 TREAD Act, with GM setting an extremely low threshold for reporting in comparison to other automakers.

Finally, a number of lawsuits are being aimed directly at dismantling the liability protection GM’s 2009 bankruptcy provided to “New GM.” The tactics range from securities fraud and loss of resale value, to wrongful death.

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GM Hits Social Media, As Part Number Debacle Adds Confusion Thu, 27 Mar 2014 13:32:08 +0000 2007 Chevrolet HHR 2LT Special Edition

The latest development in the GM ignition recall fiasc

Automotive News reports Barra recorded and released five short videos for GM’s YouTube channel in an ongoing attempt to minimize the damage to her company’s reputation in the court of public opinion. The overall message of the videos is that the public is the automaker’s compass, and GM will develop “a world class process” of vehicle safety evaluation so that nothing resembling the current crisis occurs in the future.

However, Bloomberg says this trial by fire is only the beginning for Barra’s tenure as GM’s CEO. Slow sales in the United States due to harsh winter weather at the start of the year, mitigating losses in Europe, restructuring of global operations in Australia and South Korea, and currency challenges in Russia and South America all have made their impact on GM’s stock value, falling 14 percent since Barra took the reins in mid-January 2014. She also must contend with Volkswagen — who knocked GM down to third in the Big Global Three trio last year — by maintaining or increasing pace in China against the Germans by as much as 10 percent.

Over in Washington, D.C., safety advocates have found the NHTSA lacks the resources needed to properly investigate provided data that could lead to a prompt recall, just as Congress has done all they could to strengthen the agency via the 2000 TREAD Act established in the wake of the 2000 Firestone-Ford recall case.

Currently, the NHTSA’s Office of Defect Investigations saw their numbers fall from 62 to 51 investigators over the years, and operates on an annual budget of $10 million since 2005. Meanwhile, the number of registered vehicles increased to 248 million in the same time, a number proving difficult to monitor — resulting in the recall crises experienced by Toyota and GM — as Advocates for Highway and Auto Safety president Jackie Gillan explains:

The idea of $10 million for an office that’s in charge of the safety of all these vehicles, undertaking investigations and doing the recalls, it’s just ridiculous. You look at the number of people working on this, you look at their inadequate funding, and you think to yourself, no wonder this is happening over and over again.

For their part, NHTSA spokesman Nathan Taylor defended his agency’s record, citing 929 recalls involving over 55 million vehicles in the last seven years as a result of their investigations. In addition, he says automakers paid a total of over $85 million in fines over delays, and notes fatalities related to defects are at an historic low. However, Taylor believes the process could be improved:

[The agency] pursues investigations and recalls wherever our data justifies doing so. NHTSA is constantly looking for ways to improve our process so we can better identify serious safety defects.

On the lawsuit front, Charles and Grace Silvas of Texas have asked U.S. District Judge Nelva Gonzales Ramos to force GM to issue a “park it now” warning to all affected owners not to drive their vehicles until the ignition switch is fixed. The possible class action suit — which could net up to $10 billion in damages — was filed not due to any fatalities experienced by the Silvas, but because the defect’s concealment led to lost resale value.

USA Today reports that Barclays analyst Brian Johnson is predicting that GM will create a settlement fund between $1 billion and $1.5 billion for affected customers, on top of banking $1 billion to pay the potentially sizable fine issued by the U.S. federal government when all is said and done. Johnson says the funds could be funneled through “Old GM,” which would maintain the wall protecting “New GM” from pre-bankruptcy liabilities.

Reuters and USA Today both warn of potential headaches dealerships and repair shops will likely experience as the recall crisis continues to unfold.

One major headache for dealers and independent parts stores will be sifting through the spare parts room to find which ignition is the improved part, and which one is the defective unit. The problem comes from both sharing the same part numbers — GM 10392423 and Delphi D14611 — a move that is considered to be counter to standard operating procedure when fixing a defective part.

For repair shops, this means the only way to tell which part is which — outside of possessing forensic engineering tools — is by disassembling every single ignition related to the recall.

The second issue: Finding enough loaner vehicles for every affected customer. Thus far, GM received 9,000 requests for such vehicles, but despite calling upon rental companies such as Enterprise and Hertz for backup, dealers are having a hard time placing customers in loaners, including Kolar Chevrolet general manager Dwayne Haapanen:

There’s been a bit of a struggle finding the cars. I burned up all my loaner fleet, and we’ve been renting from Enterprise — and now they are out of cars.

Consumers are also having a hard time obtaining a loaner, though quantity isn’t the only issue. GM’s hotline for recall questions and loaner requests has seen long waits for callers, as well as a lack of thorough training for those manning the phones, sometimes leading to request denials. The automaker is adding staffing and improving training to alleviate the problems.

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GM To Go Before Senate Panel, As Allegations Of Hardball Tactics Surface Wed, 26 Mar 2014 13:16:50 +0000 Chevrolet Cobalt Sedan

General Motors CEO Mary Barra and National Highway Traffic Safety Administration acting director David Friedman will testify before the United States Senate on April 2 about their respective parties’ handling of the ongoing GM ignition recall crisis just as two senators introduced a bill expanding public access to safety filings made by all automakers to the federal government.

Automotive News reports Barra and Friedman will take questions from the Senate Commerce Committee’s Consumer Protection panel. Their joint appearance follows their first before the U.S. House Energy and Commerce Committee the day prior. Both hearings are expected to seek answers to questions surrounding how both GM and the NHTSA responded in the move to recall the defective ignition switch found in a handful of 2003 – 2007 GM models.

Automotive News also says Senators Ed Markley of Massachusetts and Richard Blumenthal of Connecticut introduced a bill which would require automakers to submit the first document of a fatality involving one of their products to NHTSA, who would then make said document and subsequent documents available to the public through an easy-to-use database. The bill reinforces the 2000 TREAD Act’s requirement of early-warning reports to be submitted to the agency, and to make that information accessible to the public.

Meanwhile, The New York Times reviewed 19 of 23 reported fatalities linked to the defective ignition switch, and found that GM either dismissed their link to the fatalities in question, or settled out of court under the veil of confidentiality. In one case, threatened to sue for reimbursement of legal fees unless lawsuits were dropped

One of the suits in question, settled between Georgia lawyer Lance Cooper and GM in 2013 — is finding new life as part of a 12-way lawsuit filed in San Francisco against the automaker over allegations that not every car affected by the defective part has been recalled, according to Automotive News. At the time of the suit, Cooper obtained hundreds of documents related to the part, along with depositions from a handful of engineers responsible, some of which are now making a public appearance in the new suit for the first time.

Separately, USA Today reports Alabama resident Steve Smith and attorney Jere Beasley have filed a lawsuit on behalf of Smith’s daughter, Aubrey Wallace Williams. Williams lost her life late last year when her 2006 Cobalt’s ignition switched off, causing loss of control that led to her crossing in front of an 18-wheel log truck. The suit comes after the recall news prompted a new investigation into Williams’ accident.

Finally, Detroit Free Press reports Niharika Taskar Ramdev will become GM’s new treasurer, who will oversee the automaker’s capital market activities and investor relations. Ramdev will report to newly appointed CFO Chuck Stevens, who says her main focus will be on “maintaining [GM's] fortress balance sheet, achieving investment grade credit ratings and developing a sustainable capital allocation strategy.”

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Congressional Hearings Loom As Switch Swap Raises Questions At GM Tue, 25 Mar 2014 13:30:40 +0000 800px-Pontiac_G5_coupe

General Motors is facing two separate lawsuits related to failures of the ignition switch recalled last month, while also preparing to bring their case before the U.S. House Energy and Commerce Committee next month, led by a representative who honed his skills upon Firestone.

Meanwhile, reports of a quiet swap between the defective ignition switch and an improved switch in 2006 – a swap that may have violated internal protocols -may have serious repercussions for GM and now-bankrupt supplier Delphi.

Finally, a test drive gone wrong results in a GMC Yukon left to burn, whose prompt investigation is only the beginning of a long learning process in how GM handles safety in the future.

Reuters and Just-Auto report two lawsuits were filed against GM over the weekend in Minnesota and California. The former, filed in state court on behalf of three teenage girls severely injured or killed in a 2006 crash involving a 2005 Chevrolet Cobalt, is considered to be the first wrongful death lawsuit since the recall was issued.  Robert Hilliard of Hilliard Munoz Gonzales is seeking $50,000 for each of the families affected, and names “New GM” as defendant.

The second, filed in federal court as a national class action by Michaels Law Group, cites fraudulent behavior on GM’s part over the ignition switch and subsequent recall. Founding firm member Johnathan Michaels called the automaker’s actions “an unfortunate chapter” in United States history, and proclaimed GM “allowed products to be put in the stream of commerce, knowing that people would die.”

Reuters also reports U.S. Senator Richard Blumenthal of Connecticut, who is a member of the Senate Commerce Committee, penned a letter to Attorney General Eric Holder asking the Department of Justice to demand GM establish a fund “to fully compensate consumers who suffered injury, death or damage” as a result of the ignition switch. He also suggested said fund could be applied while the DOJ conducts their investigation into the recall, one of many being conducted by various federal parties, including the Commerce Committee and the House Energy and Commerce Committee.

Bloomberg says Representative Fred Upton of Michigan, one of 32 House Republicans to back the 2008 bailouts and former co-chair of the Congressional Automotive Congress, will be take part in hearings on April 1 when the committee meets with GM CEO Mary Barra and other executives in a hearing to discuss what happened with the recall. Fourteen years earlier, Upton took on Ford and Firestone over the Explorer’s defective tires, resulting in the Transportation Recall Enhancement, Accountability and Documentation Act of 2000 now affecting both General Motors and the National Highway Traffic Safety Administration.

Regarding the NHTSA, the Detroit Free Press reports Senator Dean Heller of Nevada sent a letter to agency acting head David Friedman asking for answers by the end of the month as to why the NHTSA’s Office of Defects Investigation “declined to forward in both 2007 and 2010 on any vehicle recall recommendation” despite receiving direct access to necessary information from GM. Heller also wants to know what if any threshold complaints need to cross before further investigation is taken.

Back home, GM’s knowledge of the defective component — and its subsequent silence — may also claim Delphi under the wave of red flags the automaker ignored at its peril. Automotive News says the litigation protection established for the supplier during its Chapter 11 bankruptcy process could fall if Delphi was found to have committed fraud by not disclosing their part in the ignition defect during proceedings.

Within the Renaissance Center, USA Today says GM learned in 2007 of a 2005 fatality when a Maryland teen, Amber Marie Rose, lost control of her Cobalt and crashed into a tree while intoxicated. The report noted the airbags had not gone off as intended, with the cause linked to the switch set to “accessory” instead of “on.”

Meanwhile, Automotive News reports the in-house-designed switch — the result of the automaker wanting to do more on its own amid rising warranty costs in the mid-1990s — didn’t meet the specs required of it until its redesign in 2006, nine years after engineers were asked to design the part. However, the improved part retained its old part number when former GM engineers claim it shouldn’t have, while GM remained quiet on the matter until 2013 when a wrongful death lawsuit from Georgia started the ball rolling on the issue.

In the wake of the ongoing maelstrom, GM appointed long-serving engineer Jeff Boyer to the newly created position of vice president of global safety. Boyer will report to Barra on all safety concerns and recall decisions. Automotive News says this is just the first in a series of moves the automaker is taking to show how it has changed since emerging from bankruptcy and government ownership over the past few years, but has a long road ahead in making substantial progress regarding its long-standing bureaucratic culture.

Finally, The Los Angeles Times reports a 2015 GMC Yukon taken for a test drive in Anaheim this weekend suffered from what Anaheim Police Department Lieutenant Tim Schmidt says was “some oil leak or some fluid leaking” during the drive, leading to a catastrophic fire once the driver pulled over upon losing control of the vehicle. Autoblog adds GM will be investigating the matter “very soon,” as per the words of spokesman Alan Adler. No one was hurt in the incident.

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GM Rallies Rentals, Braces For Further Investigation Mon, 24 Mar 2014 12:35:40 +0000 Saturn-Ion-RedLine

General Motors has issued a new recall for 355 vehicles, while also facing a possible lawsuit by an investor over “immorality”. GM may also face a new probe involving the automaker’s bankruptcy and its relation to the original recall that thrust GM into the headlines, just as the agency responsible for investigating the problem at GM faces an audit from the Department of Transportation.

The New York Times reports the Justice Department has added an additional probe into their ongoing investigation of the 2014 recall of 1.76 million vehicles over a defective ignition switch linked to 31 crashes and 12 deaths.

The probe questions whether GM knew everything about the problem going into the 2009 bankruptcy — the automaker said they were alerted as early as 2001 — and failed to disclose the defect in full to both the federal government and the public during bankruptcy proceedings. This separate probe is being handled by the same group of FBI agents and federal prosecutors in New York who also brought forth the fraud case against Toyota that ended in a $1.2 billion settlement last week.

Meanwhile, Automotive News reports Transportation Secretary Anthony Foxx has asked the Department of Transportation’s inspector general Calvin Scovel to conduct an audit of the National Highway Traffic Safety Administration as to whether or not the agency properly looked into the issues leading up to the February 2014 recall, in light of the aformentioned crashes and deaths. The audit, according to Foxx, is to ensure “that DOT and NHTSA have a full understanding of the facts regarding the GM recall and can take corrective actions to enhance NHTSA’s safety function to the extent necessary and appropriate.”

On the investor front, Bloomberg reports a GM investor has filed a lawsuit against both the automaker and current CEO Mary Barra over every recall issued since late February this year.

In filing his complaint with the U.S. District Court in Detroit, George Pio called the automaker’s lack of immediate action “illegal and immoral,” and that news of the recalls, investigations et al surrounding GM as of late “triggered a sharp decline in the company’s share price, wiping out billions in shareholder value.”

The suit is filed on behalf of any individual who purchased stock between November 17, 2010 and March 10, 2014; no money damages have been specified.

Adding fuel to the fire are two stories from Edmunds, with the first related to the original recall regarding free loaner vehicles to those affected while their own vehicles are serviced beginning next month.

GM has called upon Enterprise, Hertz, Avis and other rental companies to help the automaker assemble a fleet for affected owners to use until the ignition switch is replaced. Though the original policy states GM owners are placed into GM vehicles, the scope of the original recall means if no related loaners are available, owners will be placed into vehicles from Ford, Honda, Chrysler et al. Underinsured owners will see a temporary boost in coverage from the automaker, as well. One source in the rental world tells us that this has been a massive undertaking for GM – with so many owners of the affected cars being under 25 (the minimum rental age at many companies) arranging coverage for these owners has been an extraordinary task.

As for the second report, Edmunds says 355 vehicles will be recalled within the week due to a transmission shift cable adjuster defect that could lead to a handful of 2014 models rolling away from where they were parked. Affected models include the Buick Regal, LaCrosse, Verano and Enclave; Chevrolet Cruze, Malibu and Traverse; and the GMC Acadia. All affected have the issue in their automatic transmissions.

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GM Recalls 1.55 Million More, Investigations, Fence-Mending Ongoing Tue, 18 Mar 2014 14:00:49 +0000 Saturn Outlook

As the recall of 1.76 million General Motors vehicles over a faulty ignition switch — a recall possibly prompted by a Georgia lawyer’s own dealings — continues to hammer away at the automaker’s “new” image, and with dealers doing all they can to mend fences between GM and its customers, three separate recalls have been issued to a total of 1.55 million vehicles.

Automotive News and Bloomberg report CEO Mary Barra asked GM executives to bring forward and give more attention to any products under review at a faster clip. The result? A recall affecting the following in the United States market:

  • 303,000 2009 – 2014 Chevrolet Express/GMC Savana full-size vans, whose instrument panels will be “reworked” to meet current crash standards meant to protect unbelted passengers
  • 63,900 2013 – 2014 Cadillac XTS sedans, whose brake boosters may suffer from corrosion issues, leading to overheating; two fires thus far have been linked to the defect
  • 1.18 million 2008 – 2013 Buick Enclave/GMC Acadia/Chevrolet Traverse/Saturn Outlook crossovers, whose wiring harnesses for the seat-mounted side airbags may be pinched, leading to non-deployment

Meanwhile, dealers are preparing for next month, when customers whose vehicles fall under the ignition switch recall will begin arriving to have the issue fixed. Though the repair will take around 30 minutes to complete, customers will be offered loaner cars if needed, as well as towing services and, should the customer wish to replace the car rather than the switch, a $500 discount toward a new car.

In turn, dealers will be at the front line of mending the fence between “New GM” and customers affected by the recall. Sam Slaughter, owner of Detroit-based Sellers Buick-GMC, says dealers will need to place the ignition repairs at the top of their service schedules, as well as lend a sympathetic ear to customers feeling burned by the automaker.

Meanwhile, Virginia-based Chevrolet-Cadillac dealer Jim Stutzman worries the recall, as transparent as it has been as of late, is throwing a spanner into the works:

It seems like every time we start to move forward, another shoe drops that puts us right back into that world view that says “These guys are total screw-ups. They just can’t operate like Honda or Toyota.” It’s a shame.

That said, the recall may have been delayed longer, and affected fewer customers, had not Georgia lawyer Lance Cooper — who had filed a wrongful-death lawsuit against GM on behalf of the family of Brooke Melton, whose 2005 Chevrolet Cobalt lost power due the faulty switch, ultimately leading to her death — pushed U.S. government regulators into looking closer into the issue via a letter issued shortly after the first recall of 800,000 vehicles.

In the lawsuit, Cooper procured more than 32,000 pages of similar lawsuits and other documents, as well as gathered depositions and assessments from several engineers and dealers regarding the switch. The lawsuit was settled last September two months before the suit’s trial date for an undisclosed amount, though a related suit — focused on Thornton Chevrolet and their failure to correct the problem that led to Melton’s death — could still go to trial.

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Ignition Flaw Fallout Grows For GM Mon, 03 Mar 2014 15:00:24 +0000 Chevrolet Cobalt SS Supercharged Sedan

The years-long silence over a faulty ignition switch responsible for 13 deaths and a recall of 1.6 million vehicles made between 2003 and 2007 is about to take a greater toll on General Motors executives as federal investigations, lawsuits and penalties loom over the horizon.

Automotive News reports General Motors’ response to the flaw may be too little, too late for the automaker. Though GM North America president Alan Batey proclaimed last week that GM would take an “unflinching look… and apply lessons learned” from their internal investigation over the lack of action and resulting silence regarding the ignition switch, former National Highway Traffic Safety Administration administrator and former consumer group Public Citizen president Joan Claybrook said the apology was all for naught:

That was a desperate move on their part to avoid heavy penalties. Saying ‘we’re sorry’ is not enough.

NHTSA announced they would be investigating the issue and its handling, and could issue as much as $35 million in fines. Meanwhile, Atlanta attorney Lance Cooper believes GM may be trying to get out in front of a lawsuit related to the ignition flaw by issuing the recall last month. Cooper recently settled a related lawsuit on behalf of the estate of Brooke Melton — whose 2010 death in a 2005 Chevrolet Cobalt was the result of the switch cutting off engine power — for undisclosed terms:

I know a lot of good people at GM, and I know that GM is trying to turn itself around. But this is a black eye for the company, because of what they knew for so long and didn’t do anything about.

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Henrik Fisker & Fisker Directors Sued by Investor Tue, 31 Dec 2013 13:02:01 +0000 henrik-fisker-at-house-oversight-committee-hearing

Company founder Henrik Fisker and Fisker Automotive Inc.’s former directors have been sued in a Delaware court by an investor. Atlas Capital Management LP blames the defendants for over $2 million in losses it allegedly suffered when the now bankrupt hybrid car startup failed. According to the lawsuit filed Dec. 27 in U.S. District Court in Wilmington, Fisker allegedly misled investors by failing to disclose problems the company knew it was having with a government loan and by keeping a 2011 safety recall secret from potential investors.

In the filing, Atlas said that if it had known the truth about the situation, it “would not have purchased or otherwise acquired its Fisker securities, or, if it had purchased such securities, it would not have done so at the artificially inflated prices which it paid.”

Fisker Automotive filed for bankruptcy on Nov. 22, listing assets of as much as $500 million and debt of as much as $1 billion in papers filed in U.S. Bankruptcy Court in Delaware. Against those figures, $2 million seems like it’s not a big deal, but Atlas Capital is not the only investment firm that put money into Fisker. Fisker is in the process of selling its remaining assets to Hybrid Tech Holdings LLC.

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Overstating MPGs May Cost Hyundai & Kia $395 Million in Proposed Settlement Tue, 24 Dec 2013 15:48:42 +0000 shyster-lead

Hyundai Motor America and Kia Motors America have agreed to pay as much as $395 million to settle class action lawsuits filed after the Korean automakers overstated fuel economy ratings on about 900,000 vehicles sold in the U.S. Hyundai’s share will be as much as $210 million while Kia will have to pay up to $185 million, according to statements issued by the companies and reports by Automotive News. The settlements must still undergo court review, expected early next year.

The lawsuits were filed after the companies disclosed in November of 2012 that approximately 600,000 Hyundais and 300,000 Kias from the 2011, 2012 and 2013 model years were sold with EPA fuel economy ratings that weren’t accurate. The U.S. EPA relies on testing results provided by car companies. At the time of the announcement, Hyundai and Kia officials apologized blaming flawed internal testing procedures for the overstatements. Eight models were affected and most consumers say the combined MPG ratings of their cars fall by one or two miles per gallon.

Over 50 lawsuits have been consolidated into a single case being handled in federal court in Los Angeles and the dollar figures work out to an average lump sum payment of ~$353 to the affected Hyundai owners and ~$667 to each affected Kia consumer.

John Yoon, attorney for Kia Motors America, said in a statement: “Kia Motors is a responsible company, and the proposed settlement enhances our goal of making things right for our customers by providing new reimbursement options. Kia Motors is fully committed to taking care of its customers, and today’s settlement adds flexibility by adding lump-sum payment options to the transparent reimbursement program introduced last year.”

The actual amounts paid out will depend on how many owners choose to receive lump sum payments. The owners also have the option of continuing to participate in the existing reimbursement program Hyundai and Kia started back when their vehicles’ fuel economy ratings were restated. Current and past owners participating in the reimbursement program receive debit cards to compensate them for the extra gasoline that they’ve had to buy.

“Customers responded favorably to the original reimbursement program,” W. Gerald Flannery, general counsel for Hyundai Motor America, said in a statement. “Today’s settlement is designed to provide them with an option, again intended to make customers fully whole for Hyundai’s fuel economy ratings restatement.”

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Dealer Groups Sue Tesla, State Agencies Over EV Maker’s Ohio Retail License Fri, 20 Dec 2013 11:00:15 +0000 Tesla retail store in Columbus, Ohio

Tesla retail store in Columbus, Ohio

Car dealers trying to head off Tesla Motors’ attempts to set up factory-direct showrooms in Ohio lost a round last month when a dealership licensing amendment that would have blocked Tesla from selling vehicles direct to retail customers in the state wasn’t voted upon in the state legislature. Now the dealers are trying the litigation route, suing Tesla and state agencies to have Tesla’s retail license voided. The defendants are Tesla, the Ohio Department of Public Safety and the Ohio Bureau of Motor Vehicles. The plaintiffs include Midwestern Auto Group in Dublin, Ohio, and Ricart Automotive Group, of Groveport, Ohio.

Earlier this month Tesla opened up its first Ohio store in a mall in Columbus, along with a service center in the same city, presumably to service the cars sold at the mall. The EV company says it will open a second store in Cincinnati by the end of the year. To bolster it’s case with the Ohio public, Tesla announced that the expansions will mean another 26 jobs and “add an initial $7 million in direct economic activity.”

James Chen, Tesla’s VP for regulatory affairs and the automaker’s associate general counsel, called the dealers’ actions “bullying”, using a current buzzword. “This is the same kind of bullying from the dealers we’ve faced in other states. The dealers, when they’re defeated in the court of public opinion, in the media and in the legislature, they then go to the courts.”

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Panoz Sues Nissan, Claims BladeGlider Copies DeltaWing Tue, 03 Dec 2013 00:03:19 +0000 blade-glider

Nissan BladeGlider

Delta Wing Project 56, a company backed by racing and pharmaceuticals entrepreneur Don Panoz to develop the DeltaWing racecar, is suing Nissan, claiming that the recently revealed BladeGlider concept, which Nissan revealed at the Tokyo Motor Show, infringes on intellectual property related to the DeltaWing.

Nissan says that their delta shaped car is inspried by “the soaring, silent, panoramic freedom of a glider and the triangular shape of a high-performance ‘swept wing’ aircraft.” One of the members of the BladeGlider project is designer Ben Bowlby, who originated the concept of the DeltaWing and he’s named as a defendant along with Nissan and Darren Cox, director of Nissan’s global motorsports program.

Panoz’s suit, filed Nov. 22 in Superior Court in Jackson County, Ga., seeks a cease-and-desist order that would prevent Nissan from displaying, racing or selling cars with such a design. Nissan has said that the BladeGlider is not just a concept and that it will be the basis of a production car.

DeltaWing coupe

DeltaWing coupe

Bowlby came up with the DeltaWing concept while working for Chip Ganassi. Panoz later got behind the idea, arranged for Dan Gurney’s All American Racers shop to build the car and Highcroft racing to campaign it at LeMans and in American endurance racing with sponsorship from Nissan. Panoz says that he’s invested millions of dollars proving the concept and would like to license the idea to automakers to use on production cars.

Bowlby, after developing the DeltaWing, was hired by Nissan as “director of motorsport innovation” and proceeded to design Nissan’s ZEOD RC electric racer, which bears a close resemblance to the DeltaWing which has a narrow, arrow shaped front end carrying two relatively narrow tires close together, and a wide wheel track in the back. The ZEOD will be racing in an experimental class next year at LeMans, just as the DeltaWing did.

Panoz said last month that he has built two prototype production cars and is pitching the idea to automakers as a means of saving fuel. The DeltaWing is exceptionally aerodynamic. Panoz claims that if Nissan is able to race and sell similar cars without paying a royalty, the DeltaWing’s shape will effectively become public domain.

“Everybody else in the market would be open to that kind of design,” he said. “And what do automobile companies do? They see something that’s taking off and they want to mimic it, don’t they?”

A spokesman for Nissan North America in Nashville declined to comment on the lawsuit.

The unconventional DeltaWing has showed promise on the racetrack. It hasn’t racked up any wins yet but it did finish 5th out of 42 cars at the 2012 Petit Le Mans race outside of Atlanta. The 4th place finisher had 50% more horsepower than the 300 HP DeltaWing, with relies on low drag and low weight to achieve speed, not a big engine.

“In the very beginning with this car, because it was so new and such a departure from what race cars were, with their big front wheels and wide front ends, a lot of experts said, ‘The car won’t work. It will fly. It won’t corner,’” Panoz said. “The car does work. It doesn’t fly, and it does corner.

The lawsuit accuses Bowlby of misappropriating confidential information and seeks “damages and injunctive relief arising out of theft of confidential and proprietary information, misappropriation of trade secrets, breach of contracts, unjust enrichment, fraud, and negligent misrepresentation.”

One reason why both Nissan and Panoz see the concept finding the light of day as a production car is that the latest CAFE targets are based on a vehicle’s wheelbase, not weight or capacity. With it’s long wheelbase a production car based on the DeltaWing would have to meet a relatively low MPG target, which it could easily meet because of light weight and aero efficiency.

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