Cars and Drivers

GM Switch Was Defective, but Did Not Cause Crash

Paul Ausick

Published: March 30, 2016 1:25 pm

Last Updated: January 13, 2020 11:21 am

In a Manhattan courtroom Wednesday morning, the first jury trial was resolved in a case related to the faulty ignition switches installed on vehicles from General Motors Co. (NYSE: GM). The jury said the switch was indeed defective, but it did not the cause a 2014 crash in which the two plaintiffs were injured.

GM paid out nearly $600 million through the end of 2015 in claims for injuries and damage. The company received 4,343 claims and paid out on 399. GM recalled nearly 2 million vehicles of various brands built between 2003 and 2014 due to faulty ignition switch that could shut off the engine and cause the driver to lose steering and braking capability. The car’s airbag system also would not operate if the engine was shut off. In all, GM paid out about $2 billion in fines and settlements to settle 124 death claims and all but two of 18 serious injury claims.

Wednesday’s verdict was issued in a case involving a 2007 Saturn Sky, which the plaintiffs claimed crashed due to the faulty ignition switch and which caused them to suffer from back pain and other injuries. GM responded that the crash was the result of slippery roads and was a minor incident.

According to Reuters, this case was chosen as a test of several hundred similar causes related to the faulty switch.

GM stock traded down about 0.5% Wednesday afternoon, at $31.04 in a 52-week range of $24.62 to $37.45. The current consensus price target for GM stock is $37.76, and the high target is $47.00.