GM, VW Lose Consumer Trust Amid Scandals - Gainesville Coins News
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GM, VW Lose Consumer Trust Amid Scandals

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GM, VW Lose Consumer Trust Amid Scandals
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A reported 124 people have died due to an ignition-switch defect in General Motors cars. Although the company was aware of the issue, they hid the information from the public for a decade. Even the company’s safety director and multiple attorneys handling the firm’s safety compliance were verifiably aware of the problem long before GM began recalling cars.

The public is outraged, and a recent settlement between federal prosecutors and GM may add fuel to that fire.

GM logoIn a shocking announcement Thursday, criminal prosecutors revealed that no individuals will be indicted as a result of the negligence. Further, prosecution of the automotive giant has been deferred for the next three years.

If the company accepts responsibility, maintains correspondence with authorities and complies with an order to have an independent company conduct its safety monitoring, the criminal case will be dropped before the end of the three-year term.

GM will also be made to pay a fine of $900 million. It is fitting to note, however, that this fine is more than a quarter less than the fine handed down to Toyota in 2014 ($1.2 billion). Furthermore, while it took more than 4 years for settlement to be struck in the Toyota case, the settlement in the GM case arrived in an expedient year-and-a-half.

Mixed Feelings

The defective ignition switch caused many cars to stall, and inhibited the use of power steering and the deployment of the vehicle’s airbags.

In a recent press-conference, U.S. attorney for the Southern District of New York Preet Bharara applauded GM for their “extraordinary cooperation” in federal investigations. Further influencing the settlement was GM’s decision to terminate 15 employees and specifically set aside funds to compensate the families affected by the deadly defect.

Barra argued that although GM has not been absolved of responsibility because of “good behavior... [other] companies should be encouraged to act as GM did here to help the truth come out faster.”

Barra stated that concern for the victims’ families was pivotal in the construction of the case. The sentiment, however, has been lost on many.

Laura Christian, mother of Amber Marie Rose, a 16-year-old who died as a result of the defect, had this to say:

"There are people at GM who made decisions that caused these deaths. Yet they will not suffer any consequences. If a person kills someone because he decided to drive drunk, he will go to jail. Yet the GM employees who caused 124 deaths are able to hide behind a corporation because our laws are insufficient. It must change."

Volkswagen "Dieselgate"

VW logoGM, however, isn’t the only automotive company in the crosshairs of an angry public. Volkswagen recently admitted to using a software that allowed their diesel-powered cars to bypass environmental standards intended to reduce smog emissions.

The software worked by temporarily causing engines to operate in accordance with the Clean Air Act whilst the vehicles underwent emissions testing. Following testing, however, this inhibiting software would not come into play, allowing the engines to generate more power. Operating at their normal capacity, the vehicles released nitrogen oxide at nearly 40 times the EPA’s limit. Eleven million cars that have been outfitted with the software must now be recalled to meet emissions standards.

Investors have not taken this deception lightly. Volkswagen shares plummeted 35 percent (nearly 30 billion dollars or 27 billion euros) in the days following the revelation.

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