GM recall expands again (again)

Friday morning, Ed covered the expanding GM recall related to faulty ignition switches. That recall now reaches 2.6 million GM vehicles from model years 2003-2011.  By the end of the day Friday, two more recalls raised that number to almost 5 million. The first new recall applies to the transmissions of 2014 Chevrolet Silverado and GMC Sierra 1500 pickup trucks, and 2015 Chevrolet Suburban and Tahoe SUVs and GMC Yukon and Yukon XL SUVs.

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The second new recall applies to Chevrolet Cruze compact cars, which apparently have a bad right front axle shaft. Get this, some of the bad shafts were installed during a previous recall for the Cruze.

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GM CEO Mary Barra will testify on Tuesday and Wednesday to House and Senate committees looking into the recalls. Of particular interest will be determining whether GM was aware of the problems before gaining immunity from liability as it came out of bankruptcy in 2009. Were courts to find that the company had engaged in bankruptcy fraud, “new GM” would be on the hook for “old GM’s” liabilities. I would also expect the SEC to get involved at some point, since new GM has been trading shares (including a $10 billion loss to taxpayers) on the theory that it was protected from old GM’s debts, something that may unravel if courts find it engaged in fraud.

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