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Lawsuit: GM hid ignition defect in recalled cars

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General Motors was hit with a lawsuit on Friday from customers who said their vehicles lost value because of ignition problems that prompted a recall of 1.6 million cars.

The proposed class action, filed in federal court in Texas, said GM knew about the problem since 2004, but failed to fix it, creating "unreasonably dangerous" conditions for drivers of the affected models.

(Read more: Kyle Bass: GM shares could touch $50, despite probe)

"GM's mishandling of the ignition switch defect....has adversely affected the company's reputation as a manufacturer of safe, reliable vehicles with high resale value," the lawsuit said.

GM did not immediately comment on the lawsuit.

GM did not recall the cars until February, despite learning of problems with the ignition switch in 2001 and issuing related service bulletins to dealers with suggested remedies in 2005.

(Read more: GM: Drivers should always use lighter key rings)

In announcing the recall, GM said that when the ignition switch was jostled, a key could turn off the car's engine and disable airbags, sometimes while traveling at high speed. GM has said it received reports of 12 deaths and 34 crashes in the recalled cars.

The plaintiffs are seeking damages from GM that include compensation for loss of the use of their vehicles and repairs and diminished resale value.

—By Reuters

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