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GM to Recall Impala Police Cars

By: Souvik Guha August 16, 2012 | Comment(s): 0 Recommended this article (0) TM | GM

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General Motors Company (G M - Analyst Report) announced it would recall 38,000 units of Chevrolet Impala police cars in North America after receiving complaints from two police fleet about front lower control arms that had fractured. The recall, which is expected to begin on August 21, covers 36,413 cars in the U.S. and 1,713 in Canada from the 2008?2012 model years.

A vehicle's control arms support its wheels. According to National Highway Traffic Safety Administration (NHTSA), a fracture in the arms can lead to loss of control, increasing the risk of a crash. The authority revealed that at the time of fracture, a tire "squeal" may be heard when turning at low speeds.

GM intends to replace both front lower control arms at the time of recall. It has not yet received any reports of accidents or injuries due to defective front lower control arms in the vehicles.

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Automotive safety recalls were brought into focus by media after Toyota Motors' (TM - Analyst Report) 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. also imposed a fine of $48.4 million on the company due to late recall of millions of defective vehicles.

Last month, GM had recalled 475,418 units of its popular compact Chevrolet Cruze sedans in order to fix a problem with their engine compartment. The recalled vehicles belong to 2011 and 2012 model years and were built at the company's Lordstown plant in Ohio from September 2010 through May 2012.

GM, a Zacks #3 Rank (Hold) company, reported a sharp 41% fall in profits to $1.49 billion or 90 cents per share in the second quarter of the year from $2.52 billion or $1.54 in the same quarter of 2011. Nevertheless, profits exceeded the Zacks Consensus Estimate by

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15 cents per share.

Revenues in the quarter fell 4.5% to $37.61 billion, which is lower than the Zacks Consensus Estimate of $37.98 billion. Unit sales rose 3% to 2.39 million vehicles from 2.32 million vehicles in the second quarter of 2011. The automaker occupied a worldwide market share of 11.6% during the quarter, down from 12.3% a yearago.

Market Summary

DJIA

13250.11

NASD

3062.39

S&P 500

1415.51

Aug 16, 2012 22:43 pm ET

85.33 0.65% 31.46 1.04%

9.98 0.71%

Adjusted earnings before interest and tax (EBIT) dipped 28% to $2.12 billion from $2.96 billion in the second quarter of 2011. Operating profit ebbed 26% to $1.82 billion from $2.45 billion a year ago.

The decline in profits and revenues was attributable to strengthening of U.S. dollar against most of the major currencies as well as weak macroeconomic conditions globally, especially in Europe and South America.

Read the full analyst report on TM Read the full analyst report on GM

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