Shares of General Motors (GM) took a hit on Thursday following a report from The Wall Street Journal stating that the National Highway Traffic Safety Administration (NHTSA) is pushing for the recall of around 20 million GM vehicles due to potentially faulty air bag inflaters.
In an earlier recall in May, GM had already recalled approximately 1 million vehicles for the same issue. However, the supplier, ARC Automotive, disputed the claim that the parts were faulty and resisted the NHTSA’s request to recall approximately 67 million vehicles from various manufacturers.
Unfortunately, the NHTSA did not provide a breakdown by manufacturer in its statement, and Toyota has not yet issued a comment regarding the potential recall.
As this situation unfolds, it is important for GM to address the air bag inflater issue promptly to ensure the safety of its customers. Prompt action will help restore confidence among investors and protect the company’s reputation in the market. Meanwhile, industry competitors should remain vigilant and proactive in monitoring their own vehicles for any potential issues to prevent a similar stock downturn.
General Motors (GM) Stands Firm against Wider Recall Amid Air Bag Inflation Concerns
General Motors (GM) has declared that the evidence and data provided by the National Highway Traffic Safety Administration (NHTSA) have not warranted a broader recall beyond the approximately 1 million ARC inflaters that have already been recalled. Citing an abundance of caution, GM emphasized that neither the affected automakers nor the NHTSA have found any systemic design or manufacturing defect in ARC frontal air bag inflators. The safety of their products remains GM’s top priority.
ARC, the manufacturer responsible for the production of these parts, has not yet responded to a request for comment.
Recalls are a common occurrence in the automotive industry, with millions of cars being recalled every year in the U.S. However, recalls that involve substantial costs or pose safety risks can have an impact on stocks. For instance, the recent recall of Chevy Bolt batteries resulted in significant financial implications, but the costs were ultimately borne by GM’s battery supplier, LG Energy Solution (373220.Korea).
As of now, it is uncertain how much the air bag inflation issue will cost or how severe its impact will be.
Nevertheless, investors tend to shy away from uncertainty, leading to a decline in GM stock on Thursday.