Cars and Drivers

Another GM Recall -- Total Now Exceeds 5 Million Vehicles

Source: courtesy of General Motors
When it rains, sometimes it pours, and it is pouring on General Motors Co. (NYSE: GM) right now. Since February the company has issued recall notices for some 5.5 million vehicles worldwide, including 1.5 million added late Monday. The company said that it will take a charge of $750 million in the first quarter to pay for all the repairs.

The latest recall includes older models of Chevy Malibu and Cobalt, Saturn Aura and Ion, and Pontiac G6. The vehicles may experience a sudden loss of electric power steering assist that could happen at any time while driving. The loss of power-assisted steering would make the vehicle harder to steer at low speeds, the company said, increasing the risk of a crash. The company did not indicate that it had been notified of any deaths or injuries related to the defect.

GM has already recalled 2.6 million vehicles to fix a defect in the ignition switch that may cause the engine to shut off. That defect has been linked to 13 deaths. Last Friday the company recalled 172,000 of its Chevy Cruze model and in a separate notice, 490,200 of the company’s pickup trucks and SUVs. In mid-February the company recalled 780,000 cars to fix a problem with airbag deployment.

And this might not be the end of the recall parade. An industry watchdog told the Los Angeles Times:

In the past General Motors had a policy of, if in doubt, don’t recall. Given the scrutiny and the possibility of criminal penalties, GM has now changed to, if in doubt, do a recall.

Toyota Motor Corp. (NYSE: TM) recently agreed to pay $1.2 billion in fines for mishandling a recall related to sudden acceleration of some cars. That recall involved 8 million vehicles and the problem was responsible for 75 fatal accidents and 93 deaths. The settlement with the U.S. Justice Department does not include the billions the company paid out in civil damage claims.

GM faces similar penalties and damage claims, and the company’s new CEO has determined that getting out in front of the issue is a better policy than trying to hide it. At least she can minimize the damage to the company’s brand image and at best she can avoid the massive penalties for covering up the problems.

The company will also delay its report of March sales, due out Tuesday morning. In a brief press release, GM said a computer error is responsible for the delay and that the company expects to report sales before close of business Tuesday.

GM shares traded down about 0.2% in Tuesday’s premarket, at $34.37 in a 52-week range of $27.11 to $41.85. CEO Mary Barra appears before a U.S. House committee Tuesday and a Senate committee on Wednesday.

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