Boston, MA 12/31/2013 (wallstreetpr) – General Motors Company (NYSE:GM), started its second vehicle recall in China in 2013 this week. The company is expected to recall about 1.5 million of its cars in the market, over defects in fuel pump brackets.
The affected vehicles are Chevrolet Sail and Buick Excelle. The recall captures vehicles manufactured between 2006 and 2011. This recall easily becomes the biggest ever in the market, for General Motors Company (NYSE:GM). The vehicles that have been found to bear these defects were manufactured in the joint venture between General Motors Company (NYSE:GM) and SAIC Motors.
The cost
Typically, product recalls leave the company with a sour taste in the tongue and in this case, General Motors Company (NYSE:GM) will have a number of public relation issues to deal with, following the recall.
Moreover, there is also an aspect of financial loss. The company could end up spending more than $120 million in fixing the fuel pump brackets. So, basically this is bad news for General Motors Company (NYSE:GM) and its investors, who are facing possible reduction in earnings due to this huge expenditure.
Although $120 million may not seem much of a loss for the giant U.S. automaker, the fact that it comes when the company has just spent a lot of its billions in repaying government bailout loan, means that it would impact its earnings in the upcoming quarters.
China 2013 recalls
The China vehicles recall net has caught even more automakers beside General Motors Company (NYSE:GM). German’s Volkswagen which is crossing the year as the leading vehicle seller in the market faced a recall sometime in 2013. Ford Motor Company (NYSE:F) is also expected to recall more than 80,000 of its cars due to steering problem starting January 2014.
The China’s quality watchdog is not leaving anything to chance in holding automakers, more so foreign companies over the safety standards of the vehicles they sell in the market.
General Motors Company (NYSE:GM)’s New Year
The calendar year 2014 is expected to be a busy year for General Motors Company (NYSE:GM). The company will be starting a fresh year without the tag of ‘Government Motors’ hanging on its neck. It is expected to launch upgrades and fresh vehicle platforms in 2014. It is also expected to recoil from low-worth markets to limit its losses and operating expenses.
