TM Toyota Motor Corporation

General Motors Company (GM) announced that it would recall about 5,000 units of its subcompact car Sonic due to missing front brake pads in some of the vehicles. Among them, 4,296 were sold in the U.S. and 577 in Canada. The problem was first detected by the automaker while doing warranty service on a Sonic.

The recalled vehicles were assembled in the Orion Township, Michigan plant. GM suspected that the brake pads, which are a part of a subassembly of components, fell off before the cars were assembled and had remained unnoticed at the bottom of containers being shipped to the Orion Township factory. The company expects that the pads are missing in 20 to 30 of the recalled vehicles.

Chevrolet Sonic, marketed globally as Chevrolet Aveo, has been manufactured since 2002, initially by GM Daewoo, the company’s South Korean subsidiary, and later by other GM-affiliated entities. The second generation Sonic was debuted in January last year. The automaker sold 10,035 units of the vehicles in the first 11 months of 2011.

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 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. also imposed a fine of $48.4 million on the company due to late recall of millions of defective vehicles.

Since the beginning of 2010, GM recalled more than 3 million vehicles in the U.S., Canada, Mexico and South Korea. Among these, the largest recall was made in June 2010, involving 1.5 million vehicles, in order to fix a problem with a heated windshield wiper fluid system that has been causing fire in the vehicles.

Recently, GM’s Chinese joint venture Shanghai GM with Shanghai Automotive Industry Corporation (SAIC) announced that it would recall 9,862 units of the 2011 Cadillac SRX model due to defective transmission systems.

A Chinese government quality control agency revealed that the defect could lead shift cables to get disconnected from the gearbox, making the vehicle unable to shift correctly. In a severe case, the problem could result in starting problem and lead to unexpected movement of the vehicle, increasing the risk of an accident.

GM, a Zacks #3 Rank (Hold) company, posted an 11% decline in profit to $1.74 billion in the third quarter of the year from $1.96 billion in the same quarter of 2011. Nevertheless, on a per share basis, the profit of $1.03 was higher than the Zacks Consensus Estimate of 99 cents and compared with $1.20 in the third quarter of 2010.

The decline in profit during the quarter was attributable to lower interest income and other non operating income (net), loss on extinguishment of debt and income tax expense.

 
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