General Motors Joins Ford, Toyota in Recall Frenzy

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General Motors (NYSE: GM ) and Isuzu announced that they are joining the likes of Ford (NYSE: F ) and Toyota (NYSE: TM ) by recalling about 258,000 SUVs on Saturday.

According to the Associated Press , 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 reports.

With car safety increasingly becoming a concern for drivers all over the country, this particular recall will only affect owners in the following states:

ConnecticutDelawareIllinoisIndianaIowaMaineMarylandMassachusettsMichiganMinnesotaMissouriNew HampshireNew JerseyNew YorkOhioPennsylvaniaRhode IslandVermontWest VirginiaWisconsin

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 year-to-date.

(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 , Stocks

Referenced Stocks: F , GM , TM

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