General Motors Announces Recall, Joins Forces with Ford

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The year of massive recalls continues as General Motors (NYSE: GM ) announced another call back Monday on over forty thousand vehicles that may have a defective part than can cause a fuel leak.

The specific models include the Chevrolet Cobalt and Pontiac G5 from model years 2007-2009 and the Chevrolet Equinox, Pontiac Torrent and Saturn Ion from model year 2007. Dealerships have been notified by General Motors to replace the defective plastic fuel pump module free of charge, as the break can cause a fuel leak possibly leading to a fire.

The announcement comes on the heels of a larger recall from General Motors that included over 470,000 vehicles for a gear shift malfunction that could cause the car to move despite being placed in the "park" position. This had yet to yield any injuries from the malfunction, and as of yet the faulty fuel pump module has yet to start any fires.


This particular recall only affects those vehicles that were sold or are currently registered in Arizona, California, Florida, Nevada and Texas, while the 2009 recall of Cobalts and G5s includes Oklahoma and Arkansas as well.

In other automotive news, General Motors and Ford (NYSE: F ) are reportedly developing nine and ten speed automatic transmissions in a mutual effort to improve fuel economy across their respective lineups of vehicles. Nine speed automatic transmissions are being developed for General Motors' front wheel drive cars while Ford is developing the ten speed automatic transmission for its rear wheel drive models.

Pressure to meet Corporate Average Fuel Economy ( CAFE ) standards of 54.5 miles per gallon by 2025 are the cause for change and such a relationship could benefit both parties in terms of manufacturing and volume costs. This is the second joint transmission effort between the two companies, as they joined forces in 2002 to create a new six speed automatic transmission for front drive vehicles that produced over eight million units starting in 2006.

Pre-market, shares of General Motors are flat while being up 12.23 percent year to date. No doubt news of another recall has negatively impacted shares, but long-term the joint partnership between General Motors and Ford could prove accretive to shares of both companies if production is on the same scale as the previous joint transmission development relationship. Shares of Ford are up 0.81 percent pre-market, yet are down 8.36 percent year to date as the company has made several recalls announcement in 2012 thus far.

(c) 2012 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Economy , Investing Ideas

Referenced Stocks: CAFE , F , GM

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