General Motors Company
) announced it would recall 10,315 units of full-size vans in 20
cold-weather U.S. states and in Canada because of fuel
filler pipes that can rust and leak due to salt and chemicals used
to clear snow from roads. The recall covers Chevrolet Express and
GMC Savana vans from the model years 2003 to 2004 with left-side
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GM will recall 9,389 vans in 20 U.S. states, including Connecticut,
Delaware, Illinois, Indiana, Iowa, Maine, Maryland, Massachusetts,
Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York,
Ohio, Pennsylvania, Rhode Island, Vermont, West Virginia and
Wisconsin. The remaining 926 vans will be recalled in Canada.
GM revealed that salt and chemicals are prone to be trapped in a
conduit that covers the fuel filler pipe and cause corrosion. As a
result, gasoline may leak and lead to fire in the vehicles.
However, the company has not yet received any reports of fire or
injuries due to the problem.
GM has decided to fix the problem free of cost and will notify
vehicle owners in October with the availability of required parts.
The company has already sent letters to the owners detailing
special repair coverage for the problem.
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
Recently, GM announced its plan to recall 38,000 units of Chevrolet
Impala police cars in North America after receiving complaints from
two police fleet about front lower control arms that had fractured.
The recall, which is expected to begin on August 21, covers 36,413
cars in the U.S. and 1,713 in Canada from the 2008-2012 model
GM, a Zacks #3 Rank (Hold) company, reported a sharp 41% fall in
profits to $1.49 billion or 90 cents per share in the second
quarter of the year from $2.52 billion or $1.54 in the same quarter
of 2011. Nevertheless, profits exceeded the Zacks Consensus
Estimate by 15 cents per share.
Revenues in the quarter fell 4.5% to $37.61 billion, which is lower
than the Zacks Consensus Estimate of $37.98 billion. Unit sales
rose 3% to 2.39 million vehicles from 2.32 million vehicles in the
second quarter of 2011. The automaker occupied a worldwide market
share of 11.6% during the quarter, down from 12.3% a year-ago.
Adjusted earnings before interest and tax (EBIT) dipped 28% to
$2.12 billion from $2.96 billion in the second quarter of 2011.
Operating profit ebbed 26% to $1.82 billion from $2.45 billion a
The decline in profits and revenues was attributable to
strengthening of U.S. dollar against most of the major currencies
as well as weak macroeconomic conditions globally, especially in
Europe and South America.