Bloomberg News

GM Fixing 2.4 Million Vehicles Drives U.S. to Most in Decade (2)

May 20, 2014

Chevrolet Traverse

The largest of today’s four recalls covers 1.34 million Buick Enclave, Chevrolet Traverse, GMC Acadia and Saturn Outlook sport-utility vehicles from model years 2009 to 2014 for front safety lap belt cables that can separate over time, General Motors Co. said in a statement. Photographer: Scott Eells/Bloomberg

General Motors Co. (GM:US)’s latest recalls have pushed the industry’s total number of vehicles called back for repairs in the U.S. to at least 22.4 million already this year, more than in any calendar year since 2004.

The biggest U.S. automaker today announced safety actions on 2.42 million cars and light trucks. GM has recalled more than 15 million vehicles globally this year and added 35 product investigators as it works to show its newfound responsiveness. The company is facing multiple probes over its slow recall of 2.59 million cars linked to at least 13 deaths.

The largest of today’s four recalls covers 1.34 million Buick Enclave, Chevrolet Traverse, GMC Acadia and Saturn Outlook sport-utility vehicles from model years 2009 to 2014 for front safety lap belt cables that can separate over time, GM said in a statement. The company also recalled 1.08 million Chevrolet Malibu sedans from 2004 to 2008 and Pontiac G6s from 2005 to 2008 because shift cables could wear out over time. The latest actions will add $200 million in charges this quarter.

“These are all issues that deserve some level of attention but probably wouldn’t have received any attention in the old regime and just shows that the threshold of what they will consider worthy of a recall has been lowered substantially,” Karl Brauer, a senior analyst with auto researcher Kelley Blue Book, said today in a telephone interview.

GM’s vehicle safety has attracted greater scrutiny after a Feb. 13 recall of potentially faulty ignition switches on the Chevrolet Cobalt and other small cars linked to fatalities. Detroit-based GM last week agreed to pay a $35 million fine as part of the Transportation Department’s investigation into how the automaker handled the recall of those vehicles.

Regulatory Probes

Congress and the U.S. Justice Department are still looking into why it took the automaker more than a decade to recall those cars with switches that could allow keys to slip out of the “on” position, shutting off the engine and disabling air bags.

Before today, GM’s total number of U.S. recalls this year through mid-May was already more than the amount the company recalled during the previous six years combined, according to U.S. National Highway Traffic Safety Administration records. GM’s previous peak year for recalls in the U.S. was 10.7 million in 2004, according to NHTSA records.

Recalls in the U.S. last year totaled almost 22 million, according to data on the agency’s website. The record, set in 2004, is 30.8 million.

Mounting Costs

Last week, GM recalled 2.7 million vehicles in the U.S. and then said it expected to take a charge of about $200 million in the second quarter, primarily for the cost of recall-related repairs announced in the quarter. Today, GM increased that to $400 million. GM took a $1.3 billion charge in the first quarter. As of last week, GM said it had recalled 12.9 million vehicles worldwide, including 11.2 million in the U.S.

GM’s global sales last year totaled 9.7 million cars and trucks.

Other actions today cover lower-volume 2015 models: 1,402 Cadillac Escalades and Escalade ESV SUVs and 58 Chevrolet Silverado HD and GMC Sierra HD pickups.

No fatalities are associated with any of today’s recalls, GM said in the statement.

GM fell 3.4 percent to $33.07 at the close in New York. The shares have dropped 19 percent this year.

Mary Barra, who became chief executive officer in January, has been reacting to the crisis by addressing potential safety issues faster and has reorganized the automaker’s engineering department to do so. She appointed Jeff Boyer vice president of global vehicle safety, as well as adding the safety investigators to speed up reviews of potential issues.

To contact the reporters on this story: Tim Higgins in Southfield, Michigan, at thiggins21@bloomberg.net; Jeff Plungis in Washington at jplungis@bloomberg.net; Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net

To contact the editors responsible for this story: Jamie Butters at jbutters@bloomberg.net Niamh Ring

The largest of today’s four recalls covers 1.34 million Buick Enclave, Chevrolet Traverse, GMC Acadia and Saturn Outlook sport-utility vehicles from model years 2009 to 2014 for front safety lap belt cables that can separate over time, General Motors Co. said in a statement. Photographer: Scott Eells/Bloomberg

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