(GM) General Motors Company Recalls Midsize SUVs

General Motors Company (GM) plans to recall 249,260 units of midsize sport utility vehicles (SUVs) in order to fix a potential fire hazard led by an electrical short. The recall would cover Chevrolet Trailblazer and GMC Envoy SUVs as well as Buick Rainier, Saab 9-7X and Isuzu Ascender SUVs, all from the 2006-2007 model years.

The vehicles are either sold or currently registered, particularly in the Northeast and Midwest states, including Connecticut, Delaware, Illinois, Indiana, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont, West Virginia, Wisconsin and the District of Columbia.

In a filing with National Highway Traffic Safety Administration (NHTSA), GM revealed that a possible electrical short could affect power windows and door locks and lead to fire in severe cases.

The automaker has decided to replace the driver’s master power window switch on Chevrolet, GMC and Buick models. It has asked Saab and Isuzu owners to call customer service centers or the NHTSA safety hotline for information regarding the repair.

This is GM’s third recall beginning this month.  Earlier this month, GM announced its plan to 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 today, covers 36,413 cars in the U.S. and 1,713 in Canada from the 2008–2012 model years.

Last week, the company also announced that it would recall 10,315 units of full-size vans in 20 cold-weather U.S. states and in Canada due to fuel filler pipes that can rust and leak due to salt and chemicals used to clear snow from roads. The recall covers Chevrolet Express and GMC Savana vans from the model year 2003 to 2004 with left-side cargo doors.

Automotive safety recalls were brought into focus by media after Toyota Motors’ (TM) 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.

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 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 year-ago.

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.
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