Tag Archive | "recalls"

GM Victims Fund Opens Door on Friday

General Motors Co. on Friday starts taking applications from victims of accidents connected to defective ignition switches in its small cars, promising the first payouts from the about $400 million fund by November, reported The Wall Street Journal.

The nation’s largest auto maker has said it would pay from $20,000 to several million dollars per claim to cover death and injuries from crashes in certain Chevrolet Cobalt, Saturn Ion and Pontiac vehicles in which the air bags didn’t deploy. A death would automatically be awarded $1 million for pain and suffering above any other payments.

The company has been criticized for excluding other midsize and larger GM cars that also face recalls for faulty ignition switches that can turn off air bags and impede brake and power steering. In July, the company recalled 8.5 million Chevrolet Impala and larger vehicles that it said also had deaths due to air bags not activating in crashes. GM has said the circumstances are different and it has no evidence the defect led to the crashes.

Attorney Bob Hilliard, who plans to submit claims for some clients, insists GM hasn’t gone far enough with its plan. On Wednesday, Mr. Hilliard filed a lawsuit on behalf of 658 people he claims are ineligible to apply due to the auto maker’s rules.

“To me the whole thing is a shallow and superficial response and designed to save GM money,” Mr. Hilliard said.

About a dozen claims are expected to come during the first week, said GM compensation adviser Kenneth Feinberg. He said the program doesn’t have a financial cap. Most claims will be filed by attorneys whose clients want to gauge what the company’s out-of-court settlement would provide.

“It is a free preview, so why wouldn’t they do it?” Mr. Feinberg said in an interview. “If they are satisfied with the amount, they yield the right to sue and we send them a check. If they aren’t they can go and litigate.”

One victim who expects to file a claim is Caitlin Pereira, 28, who was involved in a car crash in her 2005 Saturn Ion in September 2013. Ms. Pereira was driving on a Los Angeles freeway when she collided with a dump truck. The air bag didn’t deploy and she suffered a broken nose and a concussion that she said has affected her memory.

Ms. Pereira said she has spent about $15,000 out of pocket on medical bills, which has been a hardship. “I ended up missing out on four months of work and had to relocate back home in Connecticut. I am now back to work at a new job, but the accident has set us back financially,” she said of her family. “I am just trying to recoup what I can so we can get back on our feet.”

In the 2.6 million compact cars covered by the plan, GM has said jarring the ignition key could move the switches to accessory from run, cutting power to the engine, shutting down electric steering and stopping the air bags from deploying.

Mr. Feinberg, who has sole authority over claim approvals and payouts, said he has no idea how many claims will be filed and processed by Dec. 31, when GM stops taking claims.

“If history is any indication, there are two spikes, with the first coming in the first two or three weeks and then a flood of claims before the program closes at the end of the year,” Mr. Feinberg said.

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Hyundai Recalls 883,000 Sonatas to Fix Gear Shifters

Hyundai is recalling its popular Sonata midsize sedan to fix problems with the gear shift levers, reported Michigan Live.

The recall covers 883,000 cars from the 2011 through 2014 model years.

The Korean automaker says the automatic transmission shift cable can separate from the shift lever. If that happens, the lever may not show the correct gear, increasing the risk of a crash.

Also, if the driver stops the car and puts the transmission in “park,” the car may still be in gear and could roll away, injuring drivers, passengers or bystanders, Hyundai said in documents posted Wednesday by the U.S. National Highway Traffic Safety Administration. Other symptoms include an inability to start the car because it can’t be shifted into park.

Hyundai has received 1,171 warranty claims about the problem, plus seven other reports with related symptoms. The documents don’t say if there have been any crashes or injuries. The Sonatas being recalled were made from Dec. 11, 2009 through May 29, 2014.

The Sonata is Hyundai’s second-best-selling car in the U.S. so far this year. First is the compact Elantra.

Hyundai will notify owners by letter between now and the end of September. Dealers will inspect the shift cables and repair the connection if needed.

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Mazda Recalls U.S. Cars With Faulty Takata Air Bags

Japan’s Mazda Motor Corp will broaden a recall of cars sold in the United States because an air-bag inflator, supplied by Japan’s Takata Corp, could rupture and seriously injure occupants, reported Reuters.

The issue of ruptured inflators – which can hurl metal shrapnel at vehicle occupants – has bedeviled Takata and triggered the recall of millions of vehicles last year. The company supplied the parts to at least nine global automakers.

The recalls were expanded this year as issues cropped up in newer models equipped with Takata air bags and inflators.

In a filing Friday by the U.S. National Highway Traffic Safety Administration, Mazda said it would recall about 18,000 older models, including 18,000 Mazda6 sedans and 50 RX-8 sports cars from 2003-2004.

NHTSA said the inflator could rupture, “with metal fragments striking and potentially seriously injuring” occupants.

The U.S. recall is part of a global recall of nearly 160,000 vehicles for similar issues announced by Mazda on June 23.

Indeed, over the past five years, about 12 million vehicles equipped with Takata air bags have been recalled around the world for similar issues.

Last week, German automaker BMW said it would recall another 1.6 million cars with Takata air bags because of the risk of injury from inflators that could rupture.

In two separate actions Friday, NHTSA said it had opened investigations into cars made by Hyundai Motor Co and Chrysler Group.

NHTSA said it was investigating nearly 400,000 2006-2006 Hyundai Sonata sedans after receiving complaints that the seat belt buckle assembly had failed. The safety agency said the problem could cause air bags to fail in a crash.

It was also investigating about 123,000 2011-2012 Dodge Chargers over complaints about engines stalling and alternator failure.

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GM’s Profit, Hit by Recalls, Tumbles 80%

A $2.5 billion pretax bill for safety recalls and a victims’ compensation fund slashed General Motors Co.’s second-quarter profit and highlighted the work it must do to close a profitability gap with rival Ford Motor Co., which reported stronger results for the quarter ahead of a critical product launch, reported The Wall Street Journal.

GM on Thursday reported a $278 million profit, off 80% from a year earlier, as special items offset North American operating-margin expansion and continued growth in China.

The Detroit-based company recently launched a new family of pickup trucks and sport-utility vehicles in the U.S., but costs related to defects—resulting in nearly 30 million recalls this year—blunted the positive impact of new models designed to compete in the sweet spot of the American market.

Meanwhile, Ford’s second-quarter profit rose 6% to $1.3 billion, propelled by record earnings in North America and momentum in Asia.

Ford, like GM, was hit by weakness in Latin America and Russia, but posted its first quarterly profit in Europe in three years even as GM’s losses in the region continue to mount.

The results highlighted the role that North American profit margins play as a barometer for the health of domestic auto makers that were once far more fixated on market share as a yardstick.

After decades of citing high production costs as a competitive disadvantage in their home market, GM and Ford are capitalizing on more favorable labor deals to cash in on a resurgence in demand for their biggest vehicles.

Both companies boosted margins in North America, but Ford’s 11.6% operating profit in the region solidly outpaced GM’s 9.2%, overshadowing Ford’s loss of 1.2 points of U.S. market share.

Shares in GM fell 4.5% to $35.74 in trading Thursday. Ford’s stock edged up to $17.84.

RBC Capital Markets analyst Joseph Spak, in an investors’ note, said GM’s margin was “below general expectations.” Mr. Spak said GM has been able to command higher prices in recent months and that may have prompted higher forecasts ahead of Thursday’s earnings.

Ford is readying a new aluminum-bodied version of its best-selling F-150 pickup truck for launch later this year. Ford warned again that costs for that launch would likely depress profits during the second half.

GM finance chief Chuck Stevens said the company is confident that it can achieve a 10% operating margins in its core market by “mid-decade.”

Mr. Stevens, speaking to reporters in Detroit, said GM’s automotive business proved “resilient” in the face of the intense public scrutiny stemming from problems with ignition switches installed in GM vehicles dating back more than a decade.

Its North American market share was virtually unchanged, and dealers used the crisis to demonstrate the improvements GM has made to its vehicles in recent years, Mr. Stevens said.

Still, past quality problems are proving to be painful. The company last quarter set aside $400 million to compensate victims of accidents involving certain small GM vehicles, including the Chevrolet Cobalt, that were built in the last decade with defective ignition switches. Mr. Stevens said the fund, to be independently administered by compensation expert Kenneth Feinberg starting Aug 1, is based on a best-guess estimate and could grow by as much as 50%.

RBC Capital’s Mr. Spak said the fund estimate was well short of some forecasts. RBC, for instance, estimated $1.5 billion in its model for the reserve.

GM also took a $900 million noncash pretax charge during the quarter for recall costs it estimates could be accumulated over the next decade on the 30 million vehicles already sold and still on U.S. roads.

The auto maker recalled 22 million vehicles in the three-month period ending June 30, setting a pace of a quarter million vehicles a day being called back for quality problems.

GM Chief Executive Mary Barra, speaking during a conference call, said the review and analysis of past quality problems is “substantially complete.”

GM still faces a U.S. Justice Department investigation that analysts think could end with a multibillion-dollar fine for not telling customers or the U.S. auto-safety regulator about safety flaws.

The company disclosed on Thursday it is now also being investigated by Transport Canada and 45 state attorneys general in connection with its recalls.

“We are cooperating fully with all requests,” the auto maker said in a federal filing. “Such investigations could in the future result in the imposition of material damages, fines or civil and criminal penalties.”

GM’s $278 million profit in the second quarter compared with $1.41 billion a year earlier. Excluding certain one-time costs.

Revenue rose slightly from a year earlier to $39.6 billion.

GM’s operating loss in Europe last quarter grew to $305 million on new restructuring charges. In South America, GM posted a loss of $81 million as the economy remains soft in that region.

Ford’s pretax operating profit edged up to $2.59 billion, with cost cutting playing a key role in helping to offset a 1% decline in revenue for the quarter to $37.4 billion. Ford affirmed a forecast for full-year pretax profit of between $7 billion and $8 billion. It earned $8.6 billion in 2013.

Ford’s net was reduced by a $329 million write-down of an investment in a Russian joint venture. Still, Ford eked out a narrow pretax profit in Europe on favorable exchange and lower costs. Chief Financial Officer Bob Shanks said “we’re clearly on the way to a profit in 2015.”

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GM Recalls Continue With Newer Model Camaros, Cadillacs

General Motors Co. (GM) recalled 717,950 vehicles, including some recent-model Chevrolet Camaros and Buick Regals, to repair seats, turn signals and other parts, reported Bloomberg.

The action involves six separate recalls, including 414,333 Camaros, Regals and Buick LaCrosses from model years 2011-2012 to replace a bolt for seat-height adjustments, Detroit-based GM said in a statement today. Today’s actions bring to almost 29 million the number of vehicles GM has flagged in North America this year after the company also revised downward recalls announced last month.

“These recalls signify how we’ve enhanced our approach to safety,” Jeff Boyer, GM’s vice president, of global vehicle safety, said in the statement. “We are bringing greater rigor and discipline to our analysis and decision making. If we identify an issue – large or small – that might affect the safety of our customers, we will act decisively.”

GM revised its tally for the number of vehicles recalled in a June 30 action because some cars had been double counted. About 6.6 million vehicles are affected by that recall, or about 1 million less than what was initially assessed, the company said in a statement sent by e-mail.

The biggest U.S. automaker is stepping up the pace of recalls as it faces multiple investigations for its slowness in calling back 2.59 million small cars with ignition flaws linked to at least 13 deaths. Since that action began in February, the company has recalled other cars for similar issues.

Chevy Spark

Today’s recalls also include 124,008 vehicles where seat hook brackets may have received an incomplete welding, GM said. No injuries or fatalities are related to this recall, GM said. The welding issue affects the 2014 Chevrolet Caprice, 2014 Chevrolet SS, and 2014-2015 Chevrolet Silverado LD and HD and 2014-2015 GMC Sierra LD and HD.

GM also recalled 120,426 Buick Regals from the 2011-2013 model years and Chevrolet Malibus from 2013 for internal turn signal indicators that may not work. GM said it isn’t aware of any injuries or fatalities related to this recall.

Other cars involved in the six recalls today include the 2014-2015 Chevy Spark to fix a lower control-arm bolt and 2015 Chevrolet and GMC large sport-utility vehicles with roof carriers that may have been attached with the wrong retaining nuts.

GM fell 35 cents, or 0.9 percent, to $37.41 at the close in New York.

GM has surpassed the record for U.S. safety fixes by an automaker in a calendar year. With today’s new recalls, the tally is 25.5 million for the U.S. and 28.8 million for North America. That eclipses Ford Motor Co. (F)’s single-year record of 23.3 million in 2001.

By comparison, automakers are projected to sell 16.1 million new cars and trucks industrywide this year, according to the average of analysts’ estimates compiled by Bloomberg.

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GM Says it Has No Fix Yet for Some Recalled Cadillacs with Switch Issues

General Motors Co. has ordered Cadillac dealers to stop selling some versions of the CTS model-range because the automaker does not have a fix yet for cars recalled in late June over an issue where engines can be shut off if the driver’s knee bumps the ignition key, the company said on Saturday, reported Reuters.

Details of incidents leading up to the June 30 recall, including three occasions where GM employees bumped the keys and shut off the engines in 2012 CTSs, were made public on Saturday by the U.S. National Highway Traffic Safety Administration, which oversees safety recalls.

The so-called stop sale order to Cadillac dealers on the 2003-2014 CTS and 2004-2006 SRX was issued July 2 and updated July 8, according to GM documents posted by NHTSA. The recall involved about 554,000 Cadillacs in the United States.

The order “is still in effect for the foreseeable future,” GM spokesman Alan Adler said on Saturday. GM engineers are “looking at one common solution” for all the recalled Cadillacs, “but they don’t have it yet,” Adler said.

GM so far this year has recalled about 14.7 million vehicles worldwide with switch-related issues and has linked at least 16 deaths to those issues.

Cadillac changed to a push-button starter switch on the redesigned 2014 CTS, which does not share the problem with older models. Some versions of the older CTS, including the wagon, were carried over for model year 2014 and were included in the recall.

GM in documents provided to NHTSA, said the main problem with the SRX and the earlier versions of the CTS involved the potential for heavy key rings or a “jarring event” such as a pothole to turn the ignition key out of the run position.

If that happens, the engine can shut off, causing loss of power steering and failure of air bags to deploy in a crash, NHTSA said.

GM intends to remedy that issue by giving owners a new key with a small hole instead of a slot, which GM says makes it more difficult to pull or jar the key out of position.

GM has a different problem with second-generation CTSs from model years 2008-2014, which use a different ignition switch than earlier models. Even after GM shifted to keys with the small hole in late 2010, the cars still displayed a susceptibility to being switched off because of a knee bump.

GM in late June recalled 2010-2014 Chevrolet Camaros for a similar problem, where knee bumps could switch the key out of position and turn off the engine. The solution was to replace the switchblade-type key and fob with a single, lighter key.

GM urged owners of the recalled cars to remove all items from key rings, including the key fob, leaving only the ignition key. It also warned drivers to adjust seats and steering columns “to allow clearance between their knee and the ignition key.”

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