One of the first of what may likely be many lawsuits has been cast against General Motors (NYSE:GM) for the alleged loss of resale value of its 20 million recalled vehicles globally, because the recall dilemma has gotten so out of hand. The price tag on the table for GM to make the complaints of “as many as 15 million GM car owners” disappear is to be $10 billion, maybe more.
“GM came out of bankruptcy making claims that the company would produce high-quality, safe vehicles, a branding position that served GM well, and that consumers relied upon,” said Steve Berman, a managing partner of Hagens Berman Sobol Shapiro, the firm bringing forth the suit. “Now we know that contrary to those claims, GM was instead wallowing in a dysfunctional culture more concerned about hiding defects and safety flaws than living up to its purported brand promise.”
Hagens Berman is hoping that GM will compensate the 15 million or so affected drivers for damage to its brand and reputation, as the vehicles are supposedly worth less on a resale basis since others will be allegedly less willing to pay better prices for vehicles with such a long string of safety infractions.
Greg Martin, a GM spokesperson, declined to comment on the lawsuit when speaking with Reuters, but he did add that, “Customers and analysts recognized the strength of the GM brand and that the market recognition has resulted in increased sales, transaction prices and residual values.” To his credit, GM’s sales figures have been seemingly unperturbed by the record-setting levels of safety recalls, even on newer models.