General Motors Co.
) announced a recall of 842,000 2003-2007 Saturn Ions, 2006-2007
Chevrolet HHRs, and 2006-2007 Pontiac Solstice and Saturn Sky
models in addition to the recent recall of 778,562 Chevrolet
Cobalt and 2005-2007 Pontiac G5 compact cars in North America.
With this, the company is recalling 1,367,146 vehicles in total
to fix faulty ignition switches which may lead to sudden shutdown
of the engine, causing near-fatal crashes.
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According to General Motors, a heavy key ring or uneven roads can
cause the ignition switch to shift away from the run position,
thus turning off the engine and electrical power. In such a
situation, the front air bags will not be deployed in case of a
crash. At present, there are reports of 31 crashes with 13
front-seat fatalities caused by collisions due to this problem.
General Motors is focused on resolving the issue and is trying to
increase the production and supply of parts. The company will be
informing customers though customer care centers and social media
teams. It will also rectify the fault at no extra charge.
General Motors notified that dealers will replace the ignition
switch to prevent the involuntary key movement. Until the
replacement is done, customers have been advised to use only the
ignition key without anything else on the key ring. Moreover,
customers should use their safety belts.
Recently, General Motors has been accused of delaying the recall
of Chevrolet Cobalt and Pontiac G5 cars. The problem was
allegedly detected in 2004, before the launch of the 2005
Chevrolet Cobalt, while the recall was announced earlier this
General Motors had earlier attempted to avoid a recall by issuing
Technical Service Bulletins for the problem. The statement
advised putting an insert into the ignition switch of the
Chevrolet HHR and Cobalt, Pontiac Solstice and G5 and Saturn Sky
and Ion vehicles.
Lawfully, the automakers are supposed to alert the National
Highway Traffic Safety Administration (NHTSA) about any safety
concerns in vehicles within five business days of recognizing the
problem. The maximum fine for late reporting currently stands at
$35 million. On Feb 24, General Motors submitted a detailed
chronology associated with its recall of Chevrolet Cobalt and
Pontiac G5 to the NHTSA.
General Motors currently holds a Zacks Rank #5 (Strong Sell).
Some better-ranked automobile stocks worth considering are
Tata Motors Limited
Tesla Motors, Inc.
Dongfeng Motor Group Company Ltd.
). Tata sports a Zacks Rank #1 (Strong Buy), while Dongfeng and
Tesla carry a Zacks Rank #2 (Buy).