GM faces $10bn compensation bill over faults

BELEAGUERED US car giant GM yesterday faced paying a compensation bill exceeding $10bn (£6bn), as legal action was launched over faults which claimants said had damaged the resale value of their cars.

According to the complaint filed in California, GM hurt millions of customers by concealing known defects and valuing cost-cutting over safety, leading to roughly 40 recalls covering more than 20m vehicles this year alone.

GM has linked 13 deaths and 54 crashes to a switch defect that could turn off the engine and disable power steering and air bags while driving.

The complaint said the defects and recalls had caused a variety of late-model vehicles to lose roughly $500 to $2,600 in resale value.

The suit, launched by law firm Hagens Berman Sobol Shapiro, claimed to paint a “disturbing picture” of GM’s approach to safety, including how “in truly Orwellian fashion” the largest US carmaker would encourage employees to avoid words such as “bad” and “failed”, and use euphemisms such as “issue” or “condition” rather than “problem” when discussing defects.

GM said it would not comment on pending litigation.