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May 25, 2017

GM accused of using 'defeat devices' in diesel trucks

GM

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General Motors Co (GM.N) was accused in a lawsuit on Thursday of rigging hundreds of thousands of diesel trucks with devices similar to those used by Volkswagen AG , to ensure they pass required emissions tests.

The proposed class-action lawsuit was filed in federal court in Detroit on behalf of people who own or lease more than 705,000 Chevrolet Silverado and GMC Sierra pickup trucks fitted with "Duramax" engines from 2011 to 2016 model years.

It said GM used at least three "defeat devices" to ensure that the trucks would meet federal and state emission standards, even if they generated more pollution in real-world driving.

GM spokesman Dan Flores called the claims "baseless," and said the trucks comply with U.S. Environmental Protection Agency emissions standards and California's own tough standards.

The lawsuit seeks remedies including possible refunds or restitution for lost vehicle value, plus punitive damages.

It adds to legal problems for Detroit-based GM, which has already paid about $2.5 billion in penalties and settlements over faulty ignition switches linked to 124 deaths.

GM joins at least five automakers whose diesel emissions have been scrutinized by regulators or consumers.

They include VW, which has admitted to cheating; Mercedes-Benz parent Daimler AG; Fiat Chrysler Automobiles NV, Peugeot SA and Renault SA

Shares of GM were down 69 cents, or 2.1 per cent, at US$32.50 in afternoon trading, after earlier falling to US$31.93.

The GM lawsuit was filed by several law firms, including Hagens Berman Sobol Shapiro, which helped reach multibillion-dollar settlements with VW on behalf of drivers and dealers.

According to the complaint, "on-road" emissions testing conducted for the plaintiffs found that Duramax-equipped trucks produced NOx pollutants, comprised of nitrogen and oxygen atoms, two to five times higher than legally permitted, and "many times" higher than their gasoline counterparts.

The named plaintiffs are Andrei Fenner of Mountain View, California and Joshua Herman of Sulphur, Louisiana.

They said they would not have bought their respective 2011 Sierra and 2016 Silverado trucks, or would have paid less for them, had they known about the alleged rigging.

Joseph Spak, an RBC Capital Markets analyst, in a research report said "negative publicity" from the lawsuit could drive buyers to trucks from Ford Motor Co or even Fiat Chrysler's Ram.

On Tuesday, the U.S. government sued Fiat Chrysler, claiming it used software on 104,000 diesel vehicles sold since 2014 to evade emission standards. Fiat Chrysler has denied wrongdoing.

The case is Fenner et al v General Motors LLC et al, U.S. District Court, Eastern District of Michigan, No. 17-11661.