General Motors to Settle Lawsuits Over Ignition Switches

Zacks Equity Research
Updated

Per a Reuters report, General Motors Company GM has agreed to settle lawsuits moved by 203 plaintiffs pertaining to the defective ignition switches in vehicles. In fact, the auto behemoth has been facing several federal lawsuits over defective ignition switches that could cause engines to halt and thwart airbags from deploying in the event of crashes.

General Motors has been facing various issues for delaying the recall of 2.6 million vehicles with defective ignition switches, which can lead to shutting down of the engine and preventing the deployment of front air bags in the event of a crash. The company issued a recall in Feb 2014, although the problem was identified back in 2001. Per the report, the defect caused 124 deaths and 275 injuries and the Detroit, MI-based automaker has paid about $2.5 billion in penalties and settlements pertaining to the defect.

Although the terms of the settlement are confidential, it is expected to resolve several state court claims too.

General Motors has underperformed the Zacks categorized Automotive - Domestic industry in the last three months. The company’s share price has declined 2.9%, while the industry has gained 6.2%.



Currently, General Motors carries a Zacks Rank #3 (Hold).

Other favorable stocks in the auto space include Allison Transmission Holdings, Inc. ALSN, Ferrari N.V. RACE and Fox Factory Holding Corp FOXF. While Allison Transmission Holdings and Ferrari sport a Zacks Rank #1 (Strong Buy), Fox Factory Holding holds a Zacks Rank #2 (Buy)
You can see the complete list of today’s Zacks #1 Rank stocks here.

Expected long-term growth rate for Allison Transmission Holdings Ferrari and Fox Factory Holding are 11%, 14.1% and 15.6%, respectively.

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