VELASQUEZ

Business Ethics. Concepts and Cases, 6th edn

Warranties not honored by GM / Chevrolet

[.] several years ago [the book issued in 2006] the engine of Martha and George Roses
Chevrolet station wagon began hissing and white smoke poured out of the tailpipe as she drove it
6 miles to work. Two non-Chevrolet mechanics who then checked the car later testified that the
radiator and cooling system were in satisfactory condition, that the radiator was not boiling
over, and that the temperature light on the dashboard was not burning. Upon taking the
engine apart, a mechanic found that a hairline crack in the engine block had allowed water to
enter the cylinder head, meaning that the car would need an expensive new engine. The engine
was still under a 5-year or 50,000-mile warranty, so the Roses thought the Chevrolet division
of GM would bear the large costs of repairing what they concluded was an inherently defective
engine block. However, when a Chevrolet service manager examined the dismantled car, he
insisted that the problem was that the radiator thermostat had stucked shut so no coolant had
reached the engine. Because the thermostat was only under a 12-months or 12,000-miles
warranty that had been expired, and because, the Chevrolet manager claimed, the faulty
thermostat had caused the engine to overheat and the engine block to crack, Chevrolet had no
responsibility under the warranty. Moreover, the car had been torn down and worked on by
unauthorized mechanics. Although the Roses pointed out that the other mechanics had found no
evidence of overheating and that no Chevrolet mechanic had suggested replacing the thermostat
at any of their regular maintainance servicings, the FM field manager and his superiors, both in
New Orleans and Detroit, refused to honor the warranty. Without the engine, the car that GM had
sold them was now worthy only 10% of what they had originally paid for it. Because they could
not afford an attorney for a trial they might lose, the Roses could not file suit against GM.