Shares price of General Motors Company GM fell 0.9% to $29.26 on Sep 9 after the automaker announced a recall of the smallest vehicle from the Cadillac line, ATS. The company is recalling 121,000 cars owing to problems in the rear window defroster control which may get overheated and lead to fire.
The recalled vehicles are ATS small sports sedans of model years 2013 to 2016. Of the total, 97,000 ATS vehicles have been recalled in the U.S. while the remaining 24,000 are mainly from Canada and Mexico.
There have been four fire incidents related to this issue but no cases of crash or injury has been reported so far. Meanwhile, the automaker estimates that around 1% of the vehicles are likely to have this problem. General Motors believes that the problem is due to weak electrical connection in the module that provides power to the defroster, which is placed in the pillar behind the driver’s seat. Continuous use of the defroster triggers the problem.
Meanwhile, General Motors has announced that dealers will update the climate control software and will remove the part which makes the defrosters operate. After the problem is fixed, drivers will be able to turn off the defroster manually.
General Motors makes frequent recalls to address safety issues, which impact consumer sentiment to a certain extent. The company recalled 181,000 vehicles from the U.S. and Canada due to headlight failures last month. The recall was aimed at rectifying the problem of overheating and possible melting of the headlight module when exposed to high temperatures. This can also cause the low-beam headlamps and daytime running lights to stop functioning. The vehicles covered under this recall mainly included the 2005 Buick LaCrosse and the 2007 Pontiac Grand Prix in the U.S. along with the 2005 Buick Allure in Canada.
General Motors is a Zacks Rank #3 (Hold) stock. Better-ranked stocks in the auto industry include Ford Motor Co. F, Continental Aktiengesellschaft CTTAY and Wabash National Corp. WNC, all carrying a Zacks Rank #2 (Buy).
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