GM Recalls Buick Encores - Analyst Blog
April 08 2013 - 8:40AM
Zacks
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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