Why Is GM's Loaner Car Policy for Recalls a Secret?

GM CEO Mary Barra Testifies At Senate Hearing On GM Recall
Mark Wilson/Getty ImagesGeneral Motors CEO Mary Barra
By Herb Weisbaum

It's easy to understand why someone who owns a General Motors car with a faulty ignition switch might not want to drive it until the defective part can be replaced.

That's why the GM (GM) told its dealers to give their customers a loaner if they asked for one.

During her appearances on Capitol Hill this week, CEO Mary Barra told Congress that the company has "empowered our dealers to take extraordinary measures" to assist its customers. And she specifically mentioned the free loaner policy.

"If people do not want to drive a recalled vehicle before it is repaired, dealers can provide them with a loaner or rental car -- free of charge," she testified.

So how do people find out about this?

That information wasn't included in the recall notice and isn't posted on the GM website.

Lawyers for GM owners in California filed a motion on Tuesday asking a U.S. District Court judge to order the automaker to immediately notify customers about the loaner program. They say this notification is required by California's Secret Warranty law, which prohibits a vehicle manufacturer from quietly starting an "adjustment program" without telling everyone who is eligible to participate.

In legal papers, a San Francisco law firm, Girard Gibbs, told the court:

...drivers are typically only offered rental cars if they call and specifically request them -- a relatively rare occurrence since many drivers do not know about the policy. If callers do not specifically request a rental car, GM and its dealerships do not mention the program. As a result, many drivers are left to choose between bearing long-term alternative transportation costs or continuing to drive unsafe vehicles.

Attorney Eric Gibbs believes GM is trying, once again, to save money. Because the program is not clearly spelled out, the response a customer gets varies from dealer to dealer, he told CNBC.

"Some people who call the dealer are getting the loaner cars. Some are told they'll receive a loaner car, but only for the time their vehicle is in the shop for repairs. Others are told that there aren't loaner cars available," Gibbs said.

GM didn't comment on the litigation, but James Cain, GM's senior manager of sales and executive communications, told CNBC that about 13,000 people across the country are now in loaner cars.

More than a dozen federal lawsuits have been filed on behalf of those who bought the recalled vehicles with defective ignition switches.

A Seattle law firm, Hagens Berman, %VIRTUAL-article-sponsoredlinks%plans to file a motion on Friday that would ask the judge in California to extend this notification requirement to all states with secret warranty laws: Connecticut, Maryland, Virginia and Wisconsin.

"How do they expect people to know about this loaner program if they don't tell them about it?" asked attorney Steve Berman. "This is a pattern with GM. They didn't tell owners about the defects and they're not telling them about this loaner program."

"We have communicated this through press releases, in speeches and sworn congressional testimony, we have discussed it in press conferences and with news media at all major broadcast and cable networks, all national newspapers and scores of regional papers, radio stations and TV stations," Cain said in an email. "In addition, we share the information freely through our [call center], at dealerships and more."

Cain confirmed that details of the loaner program are not on the GM website and wrote that he would suggest that it be added.

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