2 Engineers Suspended in GM Ignition Switch Recall, Costs Rise to $1.5B

GM_Ignition_Switch_RecallA recent series of recalls, including a faulty ignition switch linked to 13 deaths, has led a number of problems for General Motors (GM) Co. Wall Street Journal reports that on Thursday, its estimated costs rose to $1.3 billion. GM’s original estimate was less than a third of the $1.3 billion charge, and this amount is also more than the company’s first quarter profit one year ago. Analysts expect the company will be posting its first quarterly net loss since it emerged from bankruptcy in 2009, WSJ reports. Additionally, the Detroit company has suspended two engineers involved in early decision-making.

GM has recalled 7 million vehicles worldwide since the start of the year. This includes a recall over a faulty ignition switch, which can cause cars to switch out of the “run” position, disabling the engine, air bags, steering, brakes and other safety measures. On Thursday, this recall was expanded to include lock cylinders that may allow keys to fall out while the car is running. GM said it was aware of one injury that occurred from an accident linked to when the key slipped out of the cylinder, causing a car to roll away.

Documents filed by GM in a federal court hearing in Texas show that there are at least 20 potential class action lawsuits filed over the ignition switch issue.

Last month, GM issued 3 more recalls involving over 1.5 million cars. The recalls were issued due to air bag issues, breaks potentially overheating, and instrument panels that need to be reworked on commercial vans.

Mary Barra, Chief Executive at GM, suspended two engineers in relation to the ignition switch recall. The individuals were involved in the development of the 2005 Chevrolet Cobalt, one of the models affected by the recall. According to Wall Street Journal, engineers have known that the ignition switch was problematic since 2001.

GM is being investigated by a number of parties. Wall Street Journal reports that an internal investigation is being conducted. Additionally, the US Attorney in New York and Congress will be probing the issue.

This entry was posted in Legal News. Bookmark the permalink.


© 2005-2016 Parker Waichman LLP ®. All Rights Reserved.