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Another round of recall from GM?

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GM just announced today that it is going to recall 2.7 million US vehicles for problems from brake lights to brakes. The recalled models include Malibu, Malibu Maxx, Pontiac G6, Saturn Auras, and Chevy Corvette.

According to Autonews, GM spent $1.3 billion in recall-related charges in the first quarter. In the second quarter, it is expecting to spend $200 million in these charges. Probably recall-related charges have become GM’s second largest expense after employees’ health benefits.

GM only generated $0.1 billion net income in its first quarter. In comparison, BMW reported a net income of $2.03 billion. Recalls and federal fines substantially harm GM’s profitability. GM should learn from these lessons, and improve vehicles’ overall safety.

One Comment

  1. Michael Barry
    Michael Barry

    At UMTRI they talked about how most companies are trying to perfect autonomous vehicles before releasing them so they don’t run into trouble with recalls. It seems like this might be a good strategy for our current cars too, unless companies like GM believe that they have earned enough trust from the public, and are not worried about loosing it due to malfunctioning products.

    May 22, 2014

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