GM Shares Drop after Latest Ignitionrelated Recall

Copyright Bill Pugliano, Getty Images

GM Shares Drop after Latest Ignition-related Recall

Shares of the automaker fell as low as $34.41, or 1.4%, in early trade Friday before pulling back to $34.62 after midday.

General Motors (IW 500/5) shares fell more than one percent Friday after its latest recall for another problem related to auto ignitions.

Following a year when it recalled some 30 million vehicles worldwide, the top U.S. automaker began 2015 with a new alert for owners of around 92,000 additional trucks and SUVs. On Thursday, GM said the trucks and SUVs, mainly in the United States but also some in Canada and Mexico, had a faulty ignition lock actuator. 

A defective actuator could inadvertently rotate while the vehicle is in motion and turn off power to steering, brakes and airbag function, resulting in the airbags not deploying in an accident. The specific problem is different to the defective ignition switches blamed for at least 42 crash deaths that led off GM's massive recalls in 2014. But a GM spokesman said that even if the new recall issue is different, the potential outcome is similar to that of the faulty ignition switches.

Affected by the recall are Chevrolet Silverados, Avalanches, Tahoes and Suburbans; GMC Sierras and Yukons; and Cadillac Escalades from 2011 and 2012.Also involved are a number of earlier models repaired with the problem part.GM said it was unaware of any accidents or injuries related to the newest ignition defect. 

Shares of the automaker fell as low as $34.41, or 1.4%, in early trade Friday before pulling back to $34.62 after midday.

Despite strong sales in 2014, GM's shares fell nearly 15% last year, mainly due to the cost of the frequent recalls.

The company is expected to pay out tens of millions of dollars in compensation to victims of the main ignition recall. 

It is facing investigations by Congress and the Justice Department over why it waited more than a decade after first uncovering that problem to start recalling cars.

GM was responsible for about half of the record 62 million vehicles recalled in the United States last year, according to data reported by the New York Times.

Copyright Agence France-Presse, 2015

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish