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General Motors Company yesterday announced new recalls of 1.5 million vehicles. The company has been taking a lot heat both in the industry as well as in the media for is lagging response to faulty ignition switches. The looming question about General Motors has become, where does the company now stand? And where is General Motors headed?

The Recalls

Over the last two months, General Motors has recalled more than 3.1 million vehicles. Due to faulty ignition switches, general Motors was forced into recalling this staggering number of vehicles in a shameful manner due to 12 related deaths. The latest recall of more than 1.6 million vehicles comes out in the wake of the ignition switches, as General Motors has begun addressing other issues. Adding to the list of defects are brake parts, airbag wiring and airbag harnessing across several model lines.

Calling General Motors Outgeneral motors

What is most damaging to the reputation of the car manufacturer is not the fact that they had to instate a recall, but that they took so long in correcting the problems that they’ve been aware of since 2001. Many of the vehicles being recalled aren’t just the newer ones, but the older models as well. Many models such as the 2005 to 2007 Chevy Cobalt, 2003 – 2007 Saturn Ion’s are in recall mode. All this attention hasn’t let General Motors fall by the wayside. In fact many government sponsored lawsuits have been filed against the company, including congressional hearings. On Monday, General Motors stated that over the next quarter they were withdrawing 300 million dollars to cover the costs of fixing the defects.

New Models Affected

While many of the older models are being affected, especially model lines that had the connotation of being dependable such as Saturn or the sub compacts offered by Chevrolet are not the only ones affected. Just about every line under the General Motors brand bracket has been affected. The 2010 – 2013 Buick Enclave and GMC Acadia is affected. The issue has followed into the SUV’s and crossover lines in Chevy, Buick and GMC. The company is also recalling over 300,000 mini and full size vans for faulty materials used. The company is looking to bring these models up to the federal safety standard for head on impact crashes.
In the Cadillac’s, as many as 64,000 vehicles are being recalled due to break wiring issues that have led to overheating and the melting of plastic components. Perhaps even more seriously, the increased risk in the possibility of engine compartment fires in vehicles sold mainly in the U.S.. There have been reports of two dealership owned Cadillac XTS luxury sedans catching fire in the engine compartments but thankfully no injuries were reported with the incidents.

Where does General Motors Stock rest?

Throughout most of Monday, General Motors stock prices remained almost constant. There was some fluctuation during midday, but it leveled of again before the exchange closed. General Motors opened up at $34.09 per share on Monday and closed at $34.14, so not much of a gain. However investors are concerned about the damage General Motors has inexplicably done to itself via the delay in fixing the defects and wonder how this will in turn affect stock prices. Over the last year, General Motors stock prices have dipped as low as $27.11 per share but have also hit a high of $41.85, so as of right now the price isn’t all that bad.

general motorsSo where is General Motors headed?

Where is General Motors headed? That is a very good question because as far as the industry is concerned, the future of General Motors is uncertain. Last month, the company unveiled its first full electric luxury Cadillac. The car was released to help combat Tesla’s strong selling and almost unmatched Model S. However the recent recalls have defiantly inhibited consumer trust of the brand. The sales numbers of Cadillac’s electric car have yet to be released, but if General Motor’s stock price is used as a comparison to that of Tesla’s, the numbers may look grim. There is no doubt that electric is the future of the car industry, but cost of these cars leaves affordability to question.

General Motors has effectively released a car to combat Tesla in the high end of the market. But if General Motors is looking for long term sales and a rebirth of a once trusted company, a shift in focus is needed. Tesla understands that the key to industry success is being able to provide an all electric, fully capable vehicle at an affordable price, which is why they are aiming to produce a $30,000 dollar version of their already successful product. If General Motors is sincere and competitive about staying relevant in the average consumer market for cars, they’d best start producing a car to beat out Tesla’s next project.

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