Markets
SUP

GM Recalls 3,300 Vehicles on New Ignition Switch Issue

General Motors Company GM has detected a new ignition switch defect in its pickup trucks and SUVs. This fault can stop the engines from functioning. To repair this defect, the automaker will be recalling about 3,300 big pickup trucks and SUVs in North America.

This time General Motors identified the defect before anyone was harmed. The company stated that the ignition switch problem may cause the engines to shut down and disable power steering, power brakes and the airbags. The automaker revealed that the trucks have ignition lock gears with an outer diameter larger than specifications which makes them difficult to turn. The keys may get fixed in the start position at high interior temperatures. If the vehicle is driven in such a condition, it could slip into "accessory" position.

The vehicles covered under the recall mainly include certain 2014 Chevrolet Silverado and GMC Sierra light-duty pickups, along with 2015 heavy-duty pickups and the 2015 Chevy Suburban and Tahoe SUVs.

One of the employees at General Motors first detected this defect in his truck and reported the issue to management. This eventually led to the announcement of the recall. The company has received five reports of engines turning off. However, no casualties have been reported. General Motors confirmed that dealers will replace the ignition lock of the recalled vehicles.

The ignition switch issue is similar to last year's problem which led to the recall of 2.6 million vehicles with defective ignition switches which could lead to shutting down of the engine and prevent deployment of front airbags in the event of a crash.

In Sep 2015, General Motors reached a settlement over the ignition switch issue with the U.S. Attorney's Office for the Southern District of New York. The automaker signed a deferred-prosecution agreement as part of the settlement. Per the agreement, the U.S. Attorney's Office agreed to delay action on the charges against General Motors for three years. Moreover, if the company manages to fulfill the terms of the agreement, the federal prosecutors may eventually dismiss the charges. Per the terms laid down, General Motors will have to cooperate with the federal government that will create an independent monitor to analyze the automaker's policies and procedures associated with safety issues and recalls. The company will also have to pay a fine of $900 million, which is likely to be reflected in its third-quarter 2015 results. Additionally, General Motors is conducting an efficient internal investigation and providing the details to the government.

Currently, General Motors carries a Zacks Rank #3 (Hold).

Better-ranked automobile stocks include Penske Automotive Group, Inc. PAG , O'Reilly Automotive Inc. ORLY and Superior Industries International, Inc. SUP , all carrying a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

PENSKE AUTO GRP (PAG): Free Stock Analysis Report

O REILLY AUTO (ORLY): Free Stock Analysis Report

SUPERIOR INDS (SUP): Free Stock Analysis Report

GENERAL MOTORS (GM): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

SUP PAG ORLY GM

Other Topics

Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More