General Motors reported last week that it’s 2nd quarter earnings fell by 85%. This huge drop was caused by the financial fallout of its delayed recall of defective vehicles and also a $400 million charge taken to compensate victims of car accidents caused by faulty ignition switches.
The Associated Press reported that recall expenses chopped $1.5 billion from GMs bottom line in the 2nd quarter as it added up the costs of repairs for nearly 30 million cars. GMs safety problems began earlier this year with the recall of 2.6 million Chevy Cobalt and other small cars that had faulty ignition switches. GM knew about the problem for more than ten years before issuing the recall. The company admitted at least 13 people died in crashes caused by the switches, although federal lawmakers say the total could be as high as 100.
According to the New York Times, GM said that 45 state attorneys general were investigating the company’s failure for so long to fix the defective switches. The Justice Department and the Securities and Exchange Commission are also investigating GM. In addition, more than 100 class-action lawsuits have been filed against the company.
The New York times also reported that GM said it’s $400 million charge for compensating victims was an estimate based on lawsuits, warranty information and other data. The company said the figure could rise by about $200 million and that there is no cap on the fund. Attorneys for victims around the country feel that number is too low based on the number of claims to be filed. Lawyers predicted several hundred claims, including at least 100 death claims.
Here are some astonishing figures tied to the GM recalls:
• 60 – the number of recalls issued by GM this year.
• 29 million – total number of vehicles recalled by GM this year.
• 2.6 million – the number of older car, including the Chevy Cobalt that GM recalled in February for faulty ignition switches, but knew about for more than a decade.
• 17.3 million – The number of GM vehicles recalled for ignition switch defects this year.
• 57 cents – cost of each replacement switch for the 2.6 million small cars initially recalled.
The Pennsylvania personal injury lawyers at Munley Law are experts in representing victims of car accidents, and are currently representing victims in several GM cases. If you are a victim of an accident in a GM car or another vehicle and would like to schedule a free consultation to see how the professionals at Munley Law can help, call 855-866-5529 or visit www.munley.com.