General Motors Company
) plans to recall 473,841 units of midsize cars in the U.S., Canada
and Mexico in order to fix their defective transmission. As many as
426,240 units will be recalled in the U.S., 40,029 units in Canada
and 7,572 units in other markets. It will include 2007-2010
Chevrolet Malibus, Pontiac G6s and Saturn Auras, all with
four-speed automatic transmissions.
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GM noticed that transmission cables in the vehicles can break,
causing the shifter to show that the car is in park when it is
actually in gear. The problem could cause the cars roll away
The automaker first detected the problem when it was gathering data
for a U.S. government investigation related to a problem with
transmission cables. However, it has not yet received any reports
of injuries but four crashes related to the problem.
GM dealers have decided to put a retainer over the end of the
cables or replace them to prevent that part from fracturing. The
vehicle owners will be notified soon for the free repairs.
GM also plans to recall 6,475 units of Chevy Sonic subcompact cars
globally in order to fix their faulty turn-signal bulb. It would
affect 4,716 cars in the U.S. and 1,759 in other markets. They were
manufactured between May 29 and August 29 at GM's Orion, Michigan,
GM has not yet received any reports of crashes or injuries due to
the problem in Chevy Sonics. Its dealers will reprogram an
incorrectly calibrated module for the cars. The vehicle owners will
be notified by letter beginning October 3.
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. had also imposed a fine of $48.4
million on the company due to late recall of millions of defective
GM seems to be very cautious about finding and fixing the defects
in their vehicles in order to keep its brand value intact. Last
month, the company made four sets of recalls.
Those recalls include 44,668 units of Chevrolet Sonic subcompacts
for faulty windshield washers, 38,000 units of Chevrolet Impala
police cars in North America for defective control arms, 10,315
units of full-size vans due to faulty fuel filler pipes and 249,260
units of midsize sport utility vehicles (SUVs) for a potential fire
hazard led by an electrical short.
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.