GM recalls another 2.6 million vehicles, doubles second-quarter charge

[May 21, 2014]  By Ben Klayman

DETROIT (Reuters) — General Motors Co said on Tuesday it is recalling another 2.6 million vehicles globally, raising the number of vehicles it has recalled so far this year to almost 15.4 million.

The four recalls are the latest announced by the largest U.S. automaker, the highest profile of which is the recall of cars with defective ignition switches linked to at least 13 deaths. GM has been criticized by safety advocates and fined by U.S. safety regulators for not catching the faulty switch earlier.

GM also said on Tuesday that it is doubling the charge it expects to take in the second quarter to about $400 million, mostly for recall-related repairs. In the first quarter, GM took a charge of $1.3 billion, mostly related to the ignition switch recall.

The Detroit company said Tuesday's actions raises the number of U.S. recalls this year to 29. That includes the earlier high-profile recall of 2.6 million vehicles to replace defective ignition switches. The total number of recalled vehicles this year is more than the previous five years combined.

The latest actions cover possible faulty seat belts, transmissions, air bags and fire issues, and mostly affected vehicles sold in the United States.
 

GM said there have been no fatalities associated with the latest recalls. The actions affect the Buick Enclave, Chevrolet Traverse, GMC Acadia and Saturn Outlook full-size crossover vehicles; older-generation Chevy Malibu and Pontiac G6 mid-sized sedans; and newer versions of the Cadillac Escalade SUV and heavy-duty Chevy Silverado and GMC Sierra full-size pickup trucks.

Last week, GM announced five recalls covering almost 3 million vehicles globally and said it would take a second-quarter charge of about $200 million. It also was fined by the U.S. National Highway Traffic Safety Administration a record $35 million for its delayed response to the defective ignition switch.

GM is also under investigation by the U.S. Department of Justice, Congress, the U.S. Securities and Exchange Commission and several states for its handling of the faulty ignition switch, which engineers first discovered in 2001. GM has been criticized for failing to detect the faulty part and for not recalling the vehicles before this year.

The automaker expects to complete an internal probe of its handling of the issue within the next two weeks.

The largest of the four new recalls announced on Tuesday covers more than 1.5 million full-size crossovers from model years 2009 through 2014 to replace potential defective seat belts. GM has told dealers to stop selling the newer models until they are repaired.

The other large recall covers almost 1.1 million older-generation mid-sized sedans with 4-speed automatic transmissions where a shift cable could wear out. The total number of vehicles affected by this recall outside the U.S. market was not yet available. This is an expansion of a previous Saturn Aura recall.

GM also put a stop-sale order on the 2015 Cadillac Escalade and Escalade ESV full-size SUVs, recalling about 1,500 vehicles because the passenger side air bags may not deploy properly in an accident. The company said it has emailed the 224 customers who had taken delivery of the vehicles, telling them not to let passengers sit in the front passenger seat until the repair has been made.

The company also recalled 58 heavy-duty versions of its 2015 full-size Chevy and GMC pickup trucks in the United States for potential fire issues.

GM shares were down 3.1 percent at $33.20 on Tuesday afternoon on the New York Stock Exchange.

(Editing by Matthew Lewis, Bernard Orr)

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