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GM recalls record 11.2 million cars in U.S. this year

By Korea Herald

Published : May 18, 2014 - 20:43

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General Motors Co., recalling an additional 2.7 million vehicles for potentially faulty brake lights and other issues, pushed its total number of cars and trucks called back for repairs in the U.S. this year to 11.2 million, the most ever for the automaker.

The 2014 total through mid-May is more than GM recalled during the previous six years combined, according to National Highway Traffic Safety Administration records. The Detroit-based company’s previous peak year for recalls in the U.S. was 10.7 million in 2004, according to NHTSA records.

Chief executive officer Mary Barra is already grappling with the recall of 2.59 million small cars for a defective ignition switch linked to 13 deaths. She reorganized the engineering department, added personnel to investigate problems and introduced a program to encourage employees to flag safety concerns. An internal report is due later this month.

The bulk of Friday’s five recalls cover 2.44 million Chevrolet, Pontiac and Saturn cars dating back to the 2004 model year. Corrosion can affect wiring and cause brake lights to fail to illuminate, Detroit-based GM said Friday in a statement. The company has received hundreds of complaints and said it’s aware of thirteen related crashes and two injuries. GM said it doesn’t know of any fatalities.

“The recent ignition recall has lead us to reexamine really every part of our business to make sure our customers and their safety are at the heart of everything we do,” Jeff Boyer, vice president of GM global vehicle safety, said in an interview. “As part of that we’ve made some changes in our overall recall process and these changes, I’m sure that you’ve seen, have resulted in a much larger than normal number of GM vehicle recalls since the beginning of the year.”

The recalls total 2.99 million worldwide, Alan Adler, a GM spokesman, said in an email. The company said it expects to take a charge of as much as about $200 million in the second quarter, primarily for the cost of recall-related repairs announced in the quarter. That’s after a $1.3 billion charge in the first quarter for recall costs. The biggest U.S. automaker said it has now recalled 12.9 million vehicles worldwide.

Its shares fell 1.7 percent Friday to $34.36 and have dropped 16 percent this year.

The latest charge takes “off the table” GM’s goal of a 10 percent earnings before interest and taxes margin in North America in the second quarter, Joseph Spak, an analyst with RBC Capital Markets, said in a note to investors Friday. “Given greater focus on quality and recalls, we believe it’s fair to assume warranty accruals have to be raised which is an added cost of business,” he wrote.

Congress, federal regulators and the U.S. Justice Department are all looking into why it took the automaker more than a decade to recall the 2.59 million cars with switches that allowed keys to slip out of the “on” position, shutting off the engine and disabling air bags.

With GM’s actions Friday, the industry in the U.S. is on track to exceed last year’s 22 million recalls and for the most vehicles since 31 million in 2004. Industrywide recalls were 19.9 million for the year so far for the U.S., according to a combination of National Highway Traffic Safety Administration data and new recall information from GM.

The 2.44 million vehicles recalled Friday for brake lamps include the Chevy Malibu from 2004 to 2012, the Malibu Maxx from 2004 to 2007, the Pontiac G6 from 2005 to 2010 and the Saturn Aura from 2007 to 2010. GM issued a technical service bulletin in 2008 describing a fix for its dealers and conducted a more limited recall in 2009 that included only 2005 model year cars. (Bloomberg)