Tag: recalls
General Motors’ Profit Skids On Recall Costs

General Motors’ Profit Skids On Recall Costs

New York (AFP) — General Motors on Thursday posted a sharp drop in second-quarter profit as the automaker took heavy charges for safety recalls and a compensation fund for victims of faulty ignition switches.

GM net profit dived 85 percent to $190 million, missing analyst expectations. A year ago the company posted a $1.26 billion profit.

Adjusted earnings per share of 58 cents came in a penny below estimates.

The largest U.S. automaker took a pre-tax net loss from special items of $1.3 billion, and a $1.2 billion charge mainly for recall-related repairs of vehicles.

It took a special charge of $400 million for the ignition-switch compensation program.

“There is no cap on this program, but this charge is the company’s best estimate of the amounts that may be paid to claimants,” GM said in a statement.

The company estimated the cost of the program could increase by $200 million.

GM said it recalled about 22 million vehicles in the second quarter, bringing the first half total to roughly 29 million.

The Detroit-based company said it was estimating future recall costs in North America and, as a result, it was taking a $900 million charge in the second quarter for possible recalls for up to the next 10 years on 30 million GM vehicles currently on the road.

GM shares dived 1.9 percent to $36.70 in pre-market trade.

GM has been under scrutiny since publicly acknowledging 13 deaths in 54 accidents linked to the ignition-switch defect in several models no longer being manufactured. The company has recalled 2.6 million cars since February for the faulty switch.

The company is under federal and congressional investigations, and multiple lawsuits, for its delayed recall of the cars.

But the recalls have not appeared to dent demand from customers and, some analyst say, in fact may be spurring sales as owners bring in their cars to dealerships for repairs and see the new models.

Net revenue in the April-June quarter rose to $39.6 billion from $39.1 billion a year ago, missing analysts’ estimate of $40.5 billion.

In the first six months of the year, revenue rose to $77 billion from $76 billion in the same period a year ago.

“Our underlying business performance in the first half of the year was strong as we grew our revenue on improved pricing and solid new vehicle launches,” said GM chief executive Mary Barra in the statement.

GM continued to grow market share this year in North America, claiming 17.2 percent in the second quarter compared with 16.7 percent a year ago.

Market share, however, fell year-over-year in all other regions. In China, the world’s largest auto market, GM’s share dropped to 13.6 percent from 14.4 percent a year ago.

Adjusted earnings fell in all regions except for the international segment, which includes China.

The company said it had “substantially completed” its efforts to address outstanding recall issues, including undertaking organizational reforms. Future recall expense was expected to “normalize” at levels “not materially” higher than pre-2014 levels.

AFP Photo / Joshua Lott

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Nissan Recalls 990,000 Cars In North America Over Airbag Issue

Nissan Recalls 990,000 Cars In North America Over Airbag Issue

New York (AFP) – Japanese automaker Nissan is recalling nearly a million of its vehicles in North America over a defect that could cause the front passenger airbag not to deploy in an accident.

The company did not indicate whether the defect was involved in any reported accidents in the letter it sent to the National Highway Traffic Safety Administration.

In the affected vehicles, the software that activates the airbags may misclassify “an occupied front passenger seat as empty,” Nissan said.

In those cases, “there may be no warning that the air bag may not deploy in a crash where it is designed to deploy, potentially increasing the risk of injury to the front passenger seat occupant,” it warned.

The recall includes 989,701 vehicles from 2013 and 2014 in several of Nissan’s lines of cars and SUVs, including the latest generation of its Altima sedan and its all electric Leaf.

The massive recall comes as U.S. auto giant GM finds itself in the crosshairs of a growing scandal over its failure to react to an ignition switch defect linked to 12 deaths.

GM is now facing multiple investigations by U.S. authorities over the issue, which was detected at the pre-production stage as early as 2001. GM waited until last month to recall 1.6 million vehicles in North America.

AFP Photo/Toshifumi Kitamura

Honda Recalling 900,000 Odyssey Minivans With Fire Risk

Honda Recalling 900,000 Odyssey Minivans With Fire Risk

By David Undercoffler, Los Angeles Times

A potential fire risk has led Honda to recall nearly 900,000 of its popular Odyssey minivans, the automaker has announced.

The voluntary recall affects 886,815 minivans from the 2005-2010 model years, Honda said. In these vehicles, the cover of the fuel strainer at the top of the gas tank could crack over time and lead to a fuel leak, increasing the risk of a fire, according to the National Highway Traffic Safety Administration.

“Honda is not aware of any crashes, injuries or fires related to this issue, which was discovered during warranty repairs,” the automaker said in a statement.

Repairs to the affected Odyssey vans could take a while, as the replacement parts aren’t readily available. Honda will notify owners of affected vehicles twice. The first notice will be sent out in late April or early May, alerting owners that their van is included in the recall.

Honda will send out a second notice in the summer when dealers have the new part and are ready to begin repairs, which will be done free of charge to consumers.

Honda first noticed the problem in October 2012 when a high demand for fuel pump replacement parts caught the automaker’s eye. By the middle of 2013, Honda determined that an acid found in chemicals used at car washes may be causing the cracks in the strainer and began investigating.

After several months of testing, Honda concluded this was the source of the cracks, and officially initiated the recall on Friday.

This is the first recall from Honda since the Japanese automaker recalled the same generation of its Odyssey minivan in November. That recall affected only the 2007 and 2008 model years, and was issued to fix a software glitch in the stability control system.

The Odyssey has been a favorite among minivan buyers and ranked among the bestselling in the entire segment in 2013.

Photo: NCBrian via Flickr