Business Ethics / Corporate Social Responsibility / Organizational Strategy / Product Development

Can We Trust Car Companies?

Eileen Carrera

Millions of Americans lose their lives to car accidents every year, but what if a fraction of these deaths were not “accidents”? What if companies like General Motors are somewhat responsible for some of these deaths? John Rawls developed a theory of justice as fairness. There is a need for society to cooperate for mutual benefit. Consumers want effective cars, and car companies want profit. Car companies should invest the time into testing their cars to a more rigorous degree because in the long-run, they are providing a very effective product to the consumers. In result, General Motors will always be able to retain its profit and revenue.

General Motors did not fix an ignition-switch defect that caused more than 100 deaths and more than 200 injuries (WSJ). The company is relatively financially affected by this matter and has settled for $900 million with the Justice Department for the criminal case back in September (WSJ). As of November 2015, General Motors may face punitive damages from the thousands of plaintiffs with injury claims who have not gotten their compensation. Although General Motors did not pull the trigger on 100 people, they did conceal a safety problem that led to these deaths. The company will continue to operate by simply paying off settlements like the $625 million that they claimed they would pay to the victims (WSJ).

Another situation that resembles this GM case is the notorious Ford Pinto Case. Ford, a publicly traded company, marketed this car called the Pinto. Soon, people started to notice that the Pinto would explode upon collision. This case got attention because three teenage girls died in a Pinto. Due to the extensive media coverage of this case and the social backlash towards Ford, the company was finally put into the spotlight and forced to recall the car.

Similar to the Pinto Case, General Motors overlooked a safety problem because their testing was not rigorous. It was cheaper to pay settlements than to change the car itself. General Motors is a publicly traded company that serves the shareholders’ priorities first, even though they do not have to. Companies like General Motors and Ford tend to focus on what is most profitable.

If GM was completely transparent and honest as soon as it realized that there was a problem with its ignition-switch defect, the company would have lost millions in profit and credibility. Fixing the recalled vehicles would have cost the company billions of dollars, which GM is now paying in both repairs and paying settlements.

If the public does not hold a company responsible for its mistakes or make it face criminal repercussions, are we in a way allowing this behavior to continue? Ultimately, GM is now facing punitive damages concluding that there ARE consequences to the lack of transparency that multi-billion dollar companies often portray. The attorney dealing with settlement cases against General Motors stated, “Lives were taken and families were devastated, and there is no way to ever change that sad fact” (USA today).

John Rawls’s notion of justice suggests that cooperation makes life better for everyone. General Motors is reliant on whether consumers buy its product or not. In order to assure fairness and mutual benefit in this transaction, General Motors will need to provide effective products in an efficient manner.

Sources:

http://www.wsj.com/articles/general-motors-may-face-punitive-damages-over-ignition-switches-1447124534

http://www.nytimes.com/2015/11/10/business/those-suing-gm-over-defect-can-seek-punitive-damages.html?ref=topics&_r=0

http://www.usatoday.com/story/money/cars/2015/09/17/gm-justice-department-ignition-switch-defect-settlement/32545959/

 

 

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s