General Motors (NYSE:
) and Isuzu announced that they are joining the likes of
) by recalling about 258,000 SUVs on Saturday.
According to the
, short circuits in power-window and door-lock switches have caused
at least 28 vehicle fires. While it is unknown whether or not
anyone has been injured from the unexpected issues, the National
Highway Traffic Safety Administration (NHTSA) has been
investigating the problem since February.
"The recall covers Chevrolet TrailBlazer, GMC Envoy, Buick
Rainier, Isuzu Ascender and Saab 97-X SUVs from the 2006 and 2007
model years. The SUVs were sold or registered in 20 U.S. states,
Washington, D.C., and Canada, where salt and other chemicals are
used to clear roads in the winter," the Associated Press
car safety increasingly becoming a concern
for drivers all over the country, this particular recall will only
affect owners in the following states:
HampshireNew JerseyNew YorkOhioPennsylvaniaRhode IslandVermontWest
Remaining the frequent victim of public scrutiny, automakers
cannot afford to continuously recall vehicles and expect no
monetary consequences. In this case, General Motors will be
providing its customers with free repairs, regardless of what state
they are located in.
Lately, General Motors is feeling heat for not only
unintentional vehicle fires, but for funding Opel International's
losses as well. According to Deutsche Bank, Opel has experienced a
30 percent year-over-year drop in production -- a loss that has
been imposing upon North American profits.
Deutsche Bank analysts believe that General Motors' true value
will not be known for months. With additional scrutiny from the
weekend recall announcement, it is no wonder that the automaker is
down slightly on Monday.
"The next 3 months should determine if GM is a good value or a
value trap. GM shares are down <3% YTD, but it feels far worse.
GM remains a cheap stock at 6x PE and 2x EBITDA with optionality to
reviving product, improving costs and removing Europe. But this
story requires a degree of market confidence the economy is not
providing, and a degree of visibility that management is also
simply not providing, leaving investors wondering if it's too early
to buy the stock," Deutsche Bank recently said.
General Motors closed Friday at $22.01, up over 8.5 percent
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