GM Recalls 4K Cars in India - Analyst Blog

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The automobile market is witnessing a series of recalls and the latest to join the list is General Motors Company ( GM ), which is recalling the diesel version of Chevrolet Sail. The automaker is recalling 4,000 vehicles in India to fix a faulty engine part.

General Motors will be recalling 2,910 compact cars and 1,090 subcompact hatchback units of Chevrolet Sail. The automaker will repair a fault in the crankshaft hub bolt, which could adversely affect the engine's performance.

In Jul 2013, General Motors had recalled 114,000 Chevrolet Tavera sport-utility vehicles (manufactured from 2005 to 2013) in India. The company recalled the vehicles in order to repair problems related to emission standards and other government specifications.

General Motors had also stopped the production and sale of Tavera BS3 and BS4 till it fixed the problem and fired several employees for breach of corporate policies. Tavera production will begin soon after the automaker receives government approval for a technical solution to the emission issue.

Recently, Ford Motor Co. ( F ) announced that it is recalling Ford Crown Victoria, Mercury Grand Marquis and Lincoln Town Car sedans manufactured from 2005 to 2011. The automaker is recalling 370,000 vehicles in the U.S and Canada to replace a steering shaft. Of these, Ford will be recalling 355,000 vehicles in the U.S. and the remaining 15,000 vehicles will be recalled from Canada.

Ford, like General Motors, has also recalled vehicles earlier. In Jun 2013, the company recalled 465,000 units of 2013 Ford Fusion, Flex, Explorer, Taurus, Interceptor Sedan and Interceptor Utility, together with the 2013 Lincoln MKZ, MKS and MKT globally in order to repair fuel leakage.

In Dec, 2012, Ford recalled 80,000 2013 Fusions in order to fix their engine leaks. In Nov, 2013 the automaker recalled another 19,000 Fusions to repair the lighting system. Ford also recalled 500 2013 Lincoln MKZ sedans with engine block heaters.

In Aug, 2013, Dongfeng Honda Automobile Co., the Chinese arm of Honda Motor Co., Ltd. ( HMC ), announced that it is recalling all Siwei CR-V vehicles manufactured from Mar 2, 2010 to Aug 30, 2012. The recall is being made to fix a defective front shock absorber piston rod. Honda is recalling almost 408,000 SUVs.

Product recalls can seriously dent a brand's image. Vehicle recalls, amid the competitive scenario, will adversely affect the company's brand value.

Currently, General Motors retains a Zacks Rank #3 (Hold). Volkswagen AG ( VLKAY ), with a Zacks Rank #1 (Strong Buy), is worth watching in the automobile industry.



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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: F , GM , HMC , VLKAY

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