GM Recalls Buick Encores - Analyst Blog

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General Motors Company ( GM ) recalled 144 units of its newly launched 2013 Buick Encores in order to fix their steering wheel fastener that may not have been properly installed. The Detroit-based automaker has informed that the steering wheel in the vehicles could come loose or separate from the steering column.

The new compact crossover Encore is built by GM Korea between Dec 9 and Dec 28. The same model is sold in Europe as Opel Mokka.

General Motors has not yet received any reports of injuries or accidents due to the defect. So far, the automaker contacted 59 Encore owners, who have experienced the heated steering wheel problem. The company has already inspected 85 unsold vehicles at Buick dealerships and found no problem in them.

Automotive safety recalls were brought into focus by media after Toyota Motors ' ( TM ) announcement of the largest-ever global recall of 3.8 million vehicles in Sep 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.

Recently, the Transportation Department of U.S. slapped a fine of $17.35 million on Toyota due to late response regarding a defect in its vehicles to safety regulators as well as late recall of those vehicles. According to the department, it was the maximum allowable fine under the law for not initiating a recall in a timely manner. The latest fine adds to $48.4 million imposed by the U.S. government on the company in 2010 due to late recall of millions of defective vehicles.

Last month, General Motors announced plans to recall 33,700 units of Buick LaCrosse sedans and Cadillac SRX crossover vehicles globally from the 2013 model year in order to fix a software glitch that could lead to a crash. GM will recall 26,582 vehicles in the U.S. and the remaining vehicles in Canada, Mexico, the Middle East and China.

General Motors revealed that the software glitch could cause the transmission to unexpectedly switch from manual to automatic mode. The automaker has not yet received any reports of crashes or injuries related to the problem. Its dealers will reprogram the transmission control module free of cost upon recalling the vehicles.

General Motors also announced that it would recall 48 units of compressed natural gas-powered versions of Chevrolet Express full-sized vans from the 2011 model year. The company intends to repair an improperly built pressure relief vent pipe in the vehicles that could allow natural gas into the passenger compartment and increase the risk of fire. It has not yet received any reports of crashes, injuries or fires related to the defective vehicles that were sold to three U.S. fleet customers and one dealer.

GM, a Zacks Rank #3 (Hold) stock, posted higher profits of $0.8 billion or 48 cents per share in the fourth quarter of 2012, compared with $0.7 billion or 39 cents in the same quarter of 2011. However, earnings missed the Zacks Consensus Estimate by a penny. The results excluded net gain from special items of $0.1 billion or 6 cents in the 2012-quarter and net loss from special items of $0.2 billion, or 11 cents in the 2011-quarter.

Revenues in the quarter scaled up 3.4% to $39.3 billion, which was higher than the Zacks Consensus Estimate of $38.6 billion. Unit sales escalated 4.2% to 2.3 million vehicles. The automaker occupied a market share of 11.5% during the quarter, down from 11.6% in the year-ago quarter.

General Motors expects to boost its top-line in 2013 with the help of new vehicle launches. At the same time, the company believes cost control measures will boost its bottom line growth. It expects 2013 capital expenditures to be at the 2012-level.

Few stocks that are performing well in the industry where GM operates include Gentherm Incorporated ( THRM ) and Visteon Corp. ( VC ). Both the stocks carry a Zacks Rank #1 (Strong Buy).

GENERAL MOTORS (GM): Free Stock Analysis Report

GENTHERM INC (THRM): Free Stock Analysis Report

TOYOTA MOTOR CP (TM): Free Stock Analysis Report

VISTEON CORP (VC): Free Stock Analysis 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 Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: GM , THRM , TM , VC

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