By Keith Crain
DETROIT (July 7, 2014) — Kenneth Feinberg has released his plan to compensate the victims of defective ignition switches in General Motors Co. cars.
It’s going to be very expensive for GM, but the company made the right decision to hire Mr. Feinberg and give him the responsibility to negotiate with the people filing claims.
It is interesting to note that all of the bad publicity GM has received in recent months doesn’t seem to have put a damper on its light-vehicle sales. Chevrolet, Buick, Cadillac and GMC all seem to be moving along without any specific fallout from the GM ignition switch problems.
Unlike competitors such as Ford Motor Co., Chrysler Group L.L.C. and Toyota Motor Corp., GM does not brand vehicles with its name. So there seems to be a disconnect in people’s minds between the name of the company and its brands. GM would seem to be lucky in that respect.
Meanwhile, Mr. Feinberg has put together standards that should do a lot to defuse the situation. He has assembled a generous package that will compensate victims harmed if faulty ignition switches kept airbags from deploying in crashes. If the airbag went off, don’t bother to apply for compensation; otherwise, everyone seems welcome.
One potential stumbling block could have been a GM move to exclude victims from before its 2009 bankruptcy. But Mr. Feinberg avoided any such legalistic defense. Regardless of when an injury occurred, anyone who suffered from this defect can make a claim.
This is going to cost GM a great deal of money. But it will take the onus off the car maker and its dealers by demonstrating that the company is doing the right thing. Yes, it’s expensive, but it’s the right thing to do.
No company has ever had recall problems like those GM has had this year. Tens of millions of vehicles are being recalled for various reasons—sometimes before GM has the replacement parts necessary to repair them.
Let’s hope this will be a huge lesson for the world’s auto manufacturers. It will be far more important to recognize safety-related defects and how they affect passengers.
The criteria for safety-related defects will be tougher in the future. Items that up to now might have not been considered safety related will be redefined.
Future cars will be safer because of the GM defect investigation.
It’s a high price to pay, but substantial safety improvements will come because of it.
This opinion column appeared on the website of Automotive News, a Detroit-based sister publication of Tire Business. Keith Crain is editor-in-chief of Automotive News and chairman of Crain Communications Inc., TB’s parent company. He can be reached at firstname.lastname@example.org.