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General Motors Recalls New Cadillac & Chevrolet

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General Motors Company (GM) plans to recall 1,627 units of recently launched 2014 Chevrolet Impala and 2013 Cadillac ATS and XTS sedans due to an electrical fault in the brake lamps and the cruise control. The automaker launched both the vehicles in 2012.

General Motors revealed that the brake lamps in some vehicles may flash even when the brake pedal is not applied. The problem could also cause the cruise control to disengage. The faulty signal of brake lamp could create false alarm of emergency braking to the following driver, resulting in a crash.

GM stated that it has not yet received any reports of crashes or injuries related to the problem. Its dealers will reprogram the cars’ body control module at no cost to owners as all the cars are still under warranty.

Last month, GM recalled more than 27,000 units of its Cadillac crossover vehicles globally because their wheel nuts may not have been tightened properly at the time of assembling. The recall affected 2013 Cadillac SRX models equipped with 18-inch wheels.

General Motors revealed that about 18,871 Cadillac vehicles will be recalled in the U.S., 913 units in Canada, and the remaining 7,397 units of exported vehicles outside North America.

Automotive safety recalls were brought into focus by media after Toyota Motors’ (TM) announcement of the largest-ever global recall of 3.8 million vehicles in September 2009, triggered by a high-speed crash that killed 4 members of a family. Later on, a string of recalls has led Toyota to face numerous personal injury and wrongful death lawsuits in federal courts.

The Transportation Department of U.S. slapped a fine of $17.35 million on Toyota due to late response regarding a defect in its vehicles to safety regulators as well as late recall of those vehicles. According to the department, it was the maximum allowable fine under the law for not initiating a recall in a timely manner. The latest fine added to $48.4 million imposed by the U.S. government on the company in 2010 due to late recall of millions of defective vehicles.

General Motors, a Zacks Rank #3 (Hold) stock, reported a 28.0% fall in earnings to 67 cents per share in the first quarter of the year from 93 cents in the same quarter of 2012 (all excluding special items) due to lower earnings generated from the company’s all geographic operations except Europe. Despite this, the automaker’s earnings exceeded the Zacks Consensus Estimate by 11 cents per share.

Net earnings fell 31.3% to $1.1 billion from $1.6 billion in the first quarter of 2012. Including net loss from special items, earnings were $0.9 billion or 58 cents per share in the quarter compared with $1.0 billion or 60 cents a year ago.

Revenues in the quarter slid 2.4% to $36.9 billion, despite a 3.6% rise in retail unit sales to 2.4 million vehicles globally. It was higher than the Zacks Consensus Estimate of $36.4 billion.

Few stocks that are performing well in the broader industry where GM operates include Magna International (MGA) and Visteon Corp. (VC). Both the stocks carry a Zacks Rank #1 (Strong Buy).

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