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GM Announces New Recalls


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General Motors has announced that it is recalling another 2.6 million vehicles worldwide. The current total for the year on recalled vehicles by GM has now hit 15.4 million recalls. GM stock has suffered in the wake of the announcement dropping 3.45% to a cost of $33.07 on Tuesday. GM which has become the poster child of auto recalls in the past few months continues to carry the crown when it comes to record numbers of recalls on products produced in the last two decades. Auto enthusiasts and loyal customers alike have both been questioning the dependability and cost of ownership on one of the largest U.S. auto manufacturers.

The Recalls

The four recalls announced by GM, the largest of the U.S. auto manufacturers has had one of the most notorious reputations attached to their brand due to the linkage with 13 deaths. The company has paid roughly 400 million dollars in recall related costs in the second quarter alone. In the first quarter, GM paid out roughly 1.3 billion dollars for the repairs of faulty ignition switches. While the recall notice has been issued globally, GM has said that the bulk of the vehicles affected were sold in the U.S. Tuesday’s recalls have totaled 29 recalls in the U.S. this year. According to experts, the number of recalls that have been issued just this year alone is more than the previous five years combined.GM 1

The latest issues that have triggered new recall notices include faulty transmissions, seatbelts, airbags, and fire issues. GM has stated that there has been no fatalities associated with the newest recalls. The current vehicles affected by these newest recalls are the Buick Enclave, GMC Acadia, Chevrolet Traverse, and the Saturn Outlook. Also some older generation models have been affected as well including the Chevrolet Malibu, Pontiac G6, newer models of the Cadillac Escalade, and the heavy duty Chevrolet Heavy Duty Silverado and GMC Sierra pickup trucks.

Other recalls cover over 1.1 million older generation sedans with 4 speed automatic transmissions where a shifting cable has a better chance of wearing out. The total number of vehicles affected by this recall outside of the U.S. is currently unavailable. GM has also put a stop sale order on the 2015 Cadillac Escalade and Escalade ESV totaling to about roughly 1,500 vehicles. The company has taken it a step further and has contacted all 224 customers who had gotten an earlier delivery, informing customers to not let anyone sit in the front seat for fear that the air bags may not deploy if engaged in an accident. Gm has certainly started the long road of stepping up to the plate when it comes to corporate responsibility, but only after the surge of fines being subjected to the company by the U.S. government.

The Fines and Penalties

GM is currently under investigation by the U.S. Securities and Exchange Commission, Congress, U.S. Department of Justice, and several states due to the faulty ignition switch that GM engineers first discovered in 2001 but the company did nothing about. GM has become a social pariah because of the failure to fix or recall the vehicles that were affected, sooner. More than 1.9 million SUV’s and crossovers produced between 2009 and 2014 need to have their seatbelts replaced for possible defects. GM has even told their dealerships to stop selling the affected vehicles until the repairs have been made.

GM has been fined a record 35 million dollars by the National Highway Traffic for the delay in its response for the ignition switch defects and experts expect more fines to be in the see-able future for the company. As of last week GM had announced 5 recalls of almost 3 million vehicles.

GM 2GM Failing Shares

GM shares closed on Tuesday at 33.20 per share on the New York Stock Exchange. Due to the constant setbacks with recalls that keep befalling GM, the company’s stock prices continue to dip and level off. The company is looking at another charge of 200 million dollars this quarter alone when it came to the cost of the repairs. GM is continually being criticized by both the U.S. government and industry advocates for their lack in a timely response for many of the recalled issues. While GM’s share price has leveled off a little above 33 dollars per share, many are wondering if over the next day or two if the share prices will remain above 30 dollars per share.

 

General Motors has been the constant subject of ridicule for their lack of a timely response and the surging number of recalls being issued by the company. Even though the company has been more efficient in announcing recalls in order to remedy defects in their products, the recalls have only continued to tarnish the GM name. It will be interesting to see how the GM share prices react over the next couple of weeks as well as how GM intends to rebound on sales and regain their former glory.

 

 

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