General Motors Company
) plans to recall 475,418 units of its popular compact Chevrolet
Cruze sedans in order to fix a problem with their engine
compartment. The recalled vehicles belong to 2011 and 2012 model
years and were built at the company's Lordstown plant in Ohio from
September 2010 through May 2012.
GM revealed that the engine compartment in the vehicles is
capable of catching flammable liquids such as oil or hydraulic
fluid and could ignite. As a result, the company has decided to
modify the engine shield under the car in order to get rid of the
The recall includes 413,418 units of affected vehicles in the
U.S., 61,299 units in Canada and 701 units in Israel. It did not
affect vehicles that were not produced at Lordstown because they do
not have the same design. However, it may affect 10,000 units of
Cruze sedans sold by GM's Australian unit, Holden, who are looking
into the issue currently.
GM has not yet received any reports of crashes, injuries or
deaths related to the problem. It will begin notify the owners
about the recall from mid-July. The fix would take about 30 minutes
at the company's dealership.
Cruze is one of the top-selling compact cars of GM in the U.S.
due to its better gas mileage. Last year, the company sold 230,000
units of the sedan.
Automotive safety recalls were brought into focus by media after
) announcement of the largest-ever global recall of 3.8 million
vehicles in September 2009, triggered by a high-speed crash that
killed 4 members of a family.
Later on, a string of recalls has led Toyota to face numerous
personal injury and wrongful death lawsuits in federal courts. The
Transportation Department of U.S. also imposed a fine of $48.4
million on the company due to late recall of millions of defective
GM, a Zacks #3 Rank (Hold) company, reported a $100 million fall
in profits to $1.6 billion in the first quarter of 2012 from $1.7
billion in the same quarter of 2011, before special items, due to
lower profits from its European operations.
On per share basis, adjusted profits were 93 cents during the
quarter, down 2 cents from the first quarter of 2011. However, it
exceeded the Zacks Consensus Estimate of 84 cents. Adjusted
earnings before interest and taxes (EBIT) dipped to $2.2 billion in
the quarter from $2.0 billion in the year-ago quarter.
Revenues in the quarter went up 4% to $37.8 billion on a 3% rise
in unit sales to 2.3 million vehicles globally. It was higher than
the Zacks Consensus Estimate of $36.4 billion. The automaker
occupied a worldwide market share of 11.3% during the quarter,
compared with 11.4% a year-ago.
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