G.M. Agrees To Remain Responsible For Shoddy Cars After Bankruptcy
General Motors has reached an agreement with the government to let consumers file what are known as product-liability claims after the company escapes from bankruptcy protection. The big win for consumers means that if a manufacturing defect in an old G.M. causes injuries in the future, consumers will still be able to sue G.M. in state court.
The chief concern for G.M. and the government is whether customers who have claims about existing products but have not yet filed lawsuits can sue the company in state courts. Because bankruptcy case law is murky on the matter, G.M. and the auto task force chose to assume the liability instead of risking a delay of the company's emergence from bankruptcy.
[...]
Courts typically allow companies under bankruptcy protection to leave claims behind in bankruptcy and emerge with a clean slate, a precedent G.M. and the government are relying upon. Chrysler, which completed a government-backed restructuring this month, left both product liability claims and unwanted dealers with its old estate, now known as Old CarCo. Claims left behind in bankruptcy generally have a slim chance of being paid.
G.M. set aside almost $1 billion last year to settle product-liability claims. Anyone with an existing product-liability suit against the company is probably out of luck, as G.M. still plans to shed those claims when it exits bankruptcy.
G.M. to Maintain Legal Liability for Claims [The New York Times]
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Comments:
I did every stupid thing you could do with my Corvair when I was 18 and never come close to tipping it over. @I Love New Jersey:
It is stupid quotes like "Shoddy" and Nader's book that really did a lot of harm to GM and other domestic auto makers. In truth, the cars are fine and, in fact, many exceed the imports in value but there is perception perpetrated by the media, blogs, and Nader-ites that create the perception of poor cars which then becomes a belief. It is a shame. Sure, I know that the next 10 response will be 'well I know person X who had a GM Y and it sucked'...I can do the same thing for VWs, Toyotas, and Hondas. Right now, the top rated, mid sized sedan is the Ford Fusion and its hybrid version is awesome. But keep printing crap like this. It does a lot of good.
Certainly not saying that it can't happen , but ...
The state of automobile technology has come so far since it was highlighted by Nader's book up there that I would be pretty surprised if there were any huge ,huge lawsuits lurking in the court system for current products. Partly , the reason is technology - cars are lighter with more advanced mettalurgy . The space program has taught engineers some valuable lessons on making materials more durable and corrosion / wear resistant.
Secondly , laws and public policy are partly responsible. We now wear seatbelts not because that whiny busybody up there says that its a good thing , but because we have to-it's the law. Airbags (unknown in Naders day) are also required for new cars. Fewer deaths = fewer lawsuits.
Finally , good old competition from our Axis enemies have made our cars immeasurably better. Remember , a lot of Nader's work in the 70's was not safety related. It was connected to shoddy quality being put out by the (then) Big 3. It wasn't Nader or his ilk that built the Corolla ,Datsun B210 or Honda Civic and forced Detroit to get better. We owe the Japanese many thanks for teaching Detroit to build better cars ,even if they haven't always learned their lesson very well. Even the worst Big 3 small car is light years ahead of what passed for competitive just a few years ago.
Taking my money to try and revive a bad company only for them to give it back to others for their shitty products. Awesome!
@I Love New Jersey: Could you clarify? Nader's book covered several aspects of the industry, and I couldn't find anything demonstrably false.
[en.wikipedia.org]
@Javert: I see where you're going with the book and all, but in regards to this article: the truth hurts. If you want some altered reality news posts, go to Perez Hilton or something.
@I Love New Jersey: No. But there are still people paid by the Chamber of Commerce to run around defending the Pinto.
Oh, look, the Big Business apologists are swarming the thread.
Improved safety came about in large part because people like Nader (whatever you may think of him these days) pushing for it and drawing attention to automakers' absolute disregard for safety.
@I Love New Jersey: Not to mention, the "damage done" included vastly improved safety across the board. Really terrible stuff, thanks to that asshole Nader, amirite?
@youbastid: He's much of like a parrot in that its blaring cliches spring from brain is disconnected of actual meaning. Though in his case, they're mostly untrue or unverifiable, and he scoots off to the next story. Pay him no mind. :)
@Javert:
Well, organizations like consumer reports continue to rate the domestics lower in terms of quality and reliability (but not as universally as in the past - the gap has shrunk).
@I Love New Jersey: If you are speaking of the Corvair it's self? Yes everything in the book was absolutely untrue and ruined a great car, one whos "faults" that where even present had been shed before the book had even come out.
But that being said, there where main comments about the industry that he was right, and he is often credited as the man who basically made seatbelts law, even though others had been pushing for them long before him.
@mythago: actually I would never call it big business apologists but Nader realists.
Nader grabbed onto a cause and ran with it. Much of what he was credited with doing to make cars "safer" had been pursued by others LONG before Nader ever got involved.
He was always and continues to be a political opportunist, one who really took the spotlight of the people who REALLY helped make cars safer.
@NeverLetMeDown: True the gap has shrunk. But hes blaming the media and consumer reports for "shoddy" cars built by the domestics? Did you buy a car in the 90's? Imports EXCEEDINGLY holding their resale and performance long after the warranties expire, yet the domestics were literally falling apart as they rolled off the factory floor. These are facts, not perception. And TBO, most people here could give two craps about what NEW rated cars are. They care about the car 4,5, even 7 years down the road. The domestics still have catching up to do on that part.
What do you mean? There's no question about it that US cars and regulations regarding safety measures were years behind other countries. The safety regulations that were introduced partly because of Nader's book have saved thousands of lives over the years. Not exploding tanks, seat belts, safety glass, motors that don't cut off your feet, crush zones, airbags (that didn't exist back then) and so on.
Any word on the new Chrysler's stance on the same?
@Decius: Ok I am sorry but there seems to be a whole lot of VERY missplaced NAder love here.
The guy didnt do shit. He jumped on a already moving train, made more noise, and got lauded as a hero when OTHERS where pushing stiffer safety regulations before him.
Not only that, but the Corvair wasnt even the car he WANTED to go after, it was the German made VW Beetle, a car that had a lot more design flaws than the Corvair BUT was protected by US import laws.
I am all for pushing the industry to take more responsibility, but the guy is a asshole, and a outright political opportunist of the same caliber as Al Sharpton who takes "public outrage" and bends it to his will to make money.
Something for the experts out there:
Say you have a 2009 car built by "old" GM, but the same model is still produced *exactly* the same by the "new" GM. Are liability claims for the "old" car still valid? If they aren't, when are companies allowed to make that distinction? Is it when a car's model-year ceases production?
There is no question there were quality problems of the past and those are documented. But it is unfair to suggest today's gm products are shoddy in quality. Buick was just rated higher than Lexus inquality. In the JD power report last week, Cadillac was #3 in a quality survey with all the GM brands showing substantial -- even dramatic -- improvement. As a baby boomer I drove toyotas and hondas for years having learned of the poor quality of american cars from my parents. But my last 2 cars have been GM cars (Enclave and Avalanche) -- not that there is any problems with toyotas and hondas as they are excellent and reliable cars -- but the GM cars are just well frankly better, more beautiful in the interior, smoother ride with excellent quality and safety measures. MPG leaders in every category except the prius and the ford fusion. Sometimes I can't believe I"m saying that but I'm a boomer who was willing to shop with an open mind and I have better transportation for it. I'm sad to say that many of my contemporaries have written off GM (maybe deserved once upon a time) and are set in their ways with little chance they will ever reconsider their hardened position. Sad in a way....I wish it weren't so.
@Jim Topoleski: OK, we've established that you dislike Ralph Nader.
Now you have your opportunity to put the spotlight on "the people who REALLY helped make cars safer."
@Riff-Raff:
Not knowing the intricacies of bankruptcy law, I would imagine it would depend of when the car left the GM factory. If it left the "Old" GM factory, then they would not be liable (since the liabilities would be discharged by the Court). If it left the "New" GM factory, they would. Of course this is moot since GM has voluntarily assumed liability for "old" GM vehicles, but Chrysler apparently hasn't (so replace "GM" with Chrysler" in the above. It's stuff like this that makes people not want to buy cars from companies that seem likely to be bankrupt.
My friend got burned really bad by GM due to the bankruptcy recently.
He had a 2006 Chev Cobalt SS (the older Supercharged model, not the new turbo model). GM had a known defect on his vehicle where the clutch would fail at about 30,000 miles give or take. This would not be excessive wear, but CATASTROPHIC failure where the clutch metal would actually crack. This is a widely known problem with this model, and it also had appeared in the Saturn Ion Redline (Supercharged) as well. This damage can cause the transmission to break and totally fail, causing massive, expensive damage.
The dealership screwed him on his lease and told him "sorry buddy, you have to pay for it" and he had to fork up $1500 to replace the clutch and labor.
This is widel documented on various forums, such as CarDomain and Cobaltss.net. GM didn't give a shit and made these people have to replace it anyway.
A class-action lawsuit was being built against GM, but due to the bankruptcy all the claimants are screwed.
What was more interesting to me is that he BOUGHT ANOTHER GM car after they SCREWED him royally. He is "I only buy American", so I told him "buy a damn Ford, why would you buy from a company that screwed you over and obviously doesn't care about having you as a customer". He said "cause my dad worked for a GM parts supplier".
GM screwed me on my Grand Prix due to it's horrid reliability. I never buy their products again and I don't reward shoddy reliability and horrid customer service. I just don't understand why my friend wishes to reward their nonsense.
@Snarkysnake: I don't know what planet you're on, but "Partly , the reason is technology - cars are lighter with more advanced mettalurgy" is completely false.
most new cars now, use similar exterior alloys as they did 30, 40 years ago. I'll tell you something else - cars today are a LOT heavier than the same models 20 years ago.
The VW golf was 1900lb or so when it was introduced in the 70s. A 2006 model is about.
My 1988 civic has a curb weight around 2200lb, a new one now is between 2600 and 2800 (depending on spec). Cars have porked up, and not for 'the safer', but for 'the profit'.
3 US spec cars, same impact, same spot over a period of 3 years. 88 civic, 91 lumina, 05 camry. Impact is with a fully grown adult deer, front passenger corner, car travelling 55-60mph - deer are a problem in winter here in Georgia
88 civic - headlight mounting loose, side running light lens broken. dent on leading edge of the bonnet(hood). Items in good repair. Total repairs needed - preventing headlight vibration, minor bodywork.
91 lumina - headlight mounting broken. front reflector broken. Wing dented and pushed slightly in. Repairs needed - panelbeating, headlight remounted needed but not immediately essential (functioned and would not dazzle other drivers).
05 Camry - extensive crumpling of wing and bonnet. front passenger lighting set inoperative. Repairs needed - replacement of headlight set (gas discharge, pricy) new body panels, resetting and recalibration of airbag sensors, front end realignment.
A lot of the 'safety' systems put in nowadays don't make things more safe. They just raise the cost of repairs, and include mannufacturer-only parts, like body panels and expensive sensors. That's the scam of crumple-zones. By designing it to collapse a certain way, they must make it the path of least resistance, which means it takes less energy to collapse it than it would without the zones being there. I can even give you an extreme example.
In September 2000, I got into an accident (it was an eventful day, in the course of one 75 mile drive, I got my one and only speeding ticket, this crash, and buckled a wheel in another incident). I was driving a 1989 Volvo 340. The man that hit me was in a 2000 Golf VR6 (on a W plate) as we exited the end of the M606. Impact was maybe 35-40 MPH. His golf was a writeoff, I had a minor dent to my back bumper, and lost a gas-strut for my hatchback. His crumplezones destroyed his car, my lack of them saved me any appreciable damage. So little damage, that it was only when my mechanic was UNhooking the towline he had already attached so I could tow my fathers golf to him, that he noticed.
I later spent a good few months working with the police training in accident investigation (lots of 'lovely' traffic accidents) and every time there was a collision between a car with crumplezones, and one without, the one with came off worse.
just because it's touted for 'safety' doesn't mean it is. I disable airbags in cars with them that I own - don't like em, not very 'safe'.
@jayphat: "Did you buy a car in the 90's? Imports EXCEEDINGLY holding their resale and performance long after the warranties expire, yet the domestics were literally falling apart as they rolled off the factory floor."
Kinda true.
I get someone knocking on the door maybe twice a month asking if i'm looking to sell my 88 civic, which is pretty beat up and has almsot 300k miles. I have yet to have anyone ask the same thing about my 91 lumina, which has 110k miles and looks almost immaculate.
@I Love New Jersey: The Corvair was a decent car, rear engined, and with a suspension that didn't allow Johnny Hot Rod to take a corner at 60 mph. There was nothing wrong with the car if it was driven normally. Same story with the Jeep. The center of gravity didn't permit the car to be driven the same way as a Ferrari but that didn't stop people from trying and suing (or having their estates filing suits) when the car flipped. Nader probably ruined small car sales in the US for years to come.
Wasn't Nader's book proven false in the end, but not after the damage was done?