General Motors Recalls More Vehicles - Analyst Blog

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General Motors Co. ( GM ) 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.

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 month.

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 ( TTM ), Tesla Motors, Inc. ( TSLA ) and Dongfeng Motor Group Company Ltd. ( DNFGY ). Tata sports a Zacks Rank #1 (Strong Buy), while Dongfeng and Tesla carry a Zacks Rank #2 (Buy).



DONGFENG MOTOR (DNFGY): Get Free Report

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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 , Business , Stocks

Referenced Stocks: DNFGY , GM , TSLA , TTM

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