General Motors Company (GM) announced that it would recall 10,000 units of its mid-size luxury sedan, Buick LaCrosse, and mid-size crossover SUV, Cadillac SRX, in order to fix a software glitch. The bug in the software system is preventing the defroster in the vehicles from clearing the windshield, thereby affecting the driver’s visibility.
The recalled vehicles belong to the 2011 model year. GM stated that it is unaware of any crashes or injuries related to the problem. The recall is anticipated to begin by March 11.
Automotive safety recalls were brought into focus by media after Toyota Motors’ (TM) announcement of the largest-ever global recall of 14 million vehicles since November 2009.
The Japanese automaker’s recall was related to problems such as faulty accelerator gas pedals and slipping floor mats as well as defective braking systems. The Transportation Department of U.S. also imposed a fine of $48.4 million due to late recall of millions of defective vehicles.
Since the beginning of 2010, GM recalled about 3 million vehicles in the U.S., Canada, Mexico and South Korea. Among these, the largest recall was made in June, involving 1.5 million vehicles, in order to fix a problem with a heated windshield wiper fluid system that has been causing fire in the vehicles.
In January this year, GM had expanded its trucks and SUV recall, announced in December last year, related to a problem with the rear axles. In December 2010, the automaker had announced that it would recall 1,262 units of Cadillac Escalades, Chevrolet Avalanches, Chevrolet Silverados and GMC Sierras. The vehicles’ rear axle cross pin had manufacturing defects, which could possibly fracture and become displaced within the axle.
However, the automaker had noticed more vehicles were built with the faulty axle pin. Consequently, it had expanded its recall by 25,489 units covering Escalade ESV, Cadillac EXT, Colorado, Suburban, Tahoe, GMC Canyon, Yukon and Yukon XL, apart from the previously recalled models.
GM, a Zacks #3 Rank (Hold) stock, posted a profit of 52 cents per share in the fourth quarter of 2010, exceeding the Zacks Consensus Estimate by 5 cents per share. The results excluded net charges of $400 million due to the previously disclosed $700 million loss on the purchase of U.S. Treasury preferred shares.
In absolute terms, the company turned a profit of $510 million during the quarter in sharp contrast to a loss of $3.52 billion in the comparable quarter of 2009 driven by the recovery in the North American and European automotive markets.
The automaker generated revenues of $36.9 billion during the quarter, which was higher than the Zacks Consensus Estimate of $34.9 billion. Unit sales escalated 11% to 2,173 vehicles from 1,952 vehicles in the fourth quarter of 2009. The automaker occupied a market share of 11.5% during the quarter, up from 11.4% in the year-ago quarter.
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