General Motors' Short Circuit?

General Motors (NYSE: GM  ) reported Monday that it would be recalling 600,000-plus of its SUVs sold in the U.S. and Canadian markets. This, on top of last week's announcement of a 1.8 million car recall. Combined, these two recalls add up to nearly 30% of the auto maker's annual sales of new cars and trucks.

Monday's recall was prompted by reports that the adhesives used to seal the vehicles' windshield wiper units might be defective, allowing water to leak into the cars and cause short circuits. Last week's recall was related to an electrical problem with the steering columns in certain 1998-2001 models.

While GM does not consider the situation with either defect to be terribly urgent -- owners will not even be officially notified of the car recall until March, and owners of the SUVs will start receiving notices in July -- the company's continuing quality control difficulties poses a dilemma for shareholders.

GM is currently the largest auto manufacturer in the world by sales. For 2003, it sold approximately 8.4 million vehicles, followed by Toyota Motor (NYSE: TM  ) at 6.8 million, and Ford (NYSE: F  ) at 6.7 million.

But the reputation that GM and fellow U.S. car manufacturers Ford and Chrysler (now DaimlerChrysler (NYSE: DCX  ) ) acquired in the 1970s for making gas-guzzling clunkers that needed to be, as one witticism put it, "Fixed Or Repaired Daily," has been hurting GM's market share for decades. Last year was no different: GM declined to a 14.7% market share globally. Even in the U.S., its market share declined from 28.3% to 28%.

Unless General Motors stops putting out cars like Microsoft (Nasdaq: MSFT  ) puts out software -- with a blue screen of death built in -- there is going to be no end to this downward trend. That is, until the "Big Three" U.S. auto makers are named Honda America (future subsidiary of Honda Motor (NYSE: HMC  ) ), Nissan America (future subsidiary of Nissan Motor (Nasdaq: NSANY  ) ), and Toyota America (future subsidiary of... you get the picture).

Are you worried for GM's future as the world's No. 1 auto maker? What do you make of the serial recalls? Ruminate with other Fools on the General Motors discussion board. Only on Fool.com.

Rich Smithactually owns a GM truck -- but while it has plenty of glitches and blemishes, he bought it used on eBay and so has no cause to blame GM for his particular troubles. He owns no shares in any company mentioned in this article.


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