General Motors Isn't the Only Automaker Struggling With Massive Recalls

Nissan also faces a recall of over 1 million vehicles this year.

Mar 26, 2014 at 3:00PM

The Dow Jones Industrial Average (DJINDICES:^DJI) was trading 19 points lower, or 0.12%, by mid-afternoon despite a new government report showing a 2.2% month-over-month increase in February in orders for durable goods -- vehicles and other products meant to last more than three years. That was the strongest reading since November, although it was driven in large part by aircraft orders. Excluding the volatile transportation segment, durable goods orders rose only 0.2%. After adverse weather conditions seen throughout early 2014, and businesses selling through inventories, economic growth in the first quarter is expected to slow from last year's fourth quarter. With that in mind, here are some companies making headlines today.

It's been a rough go for some automakers for the first quarter of 2014. Merely a few weeks into Mary Barra's new role as CEO of General Motors (NYSE:GM), the company began recalling 1.6 million small cars due to a faulty ignition switch tied to at least 12 deaths. GM shares have slid roughly 15% under Barra's watch, and the problems go further than vehicle recalls.


GM hopes sales of its 2014 Silverado pick up this spring. Source: General Motors.

GM's most important vehicle, the Chevrolet Silverado, saw sales decline 15% over the first two months of the year compared to 2013. Investors are awaiting sales results for March, when the company offered its steepest discounts on the Silverado to date; if sales still struggle, it'll be a very bad sign for America's largest automaker. Also of interest to investors is General Motors' Cadillac brand, which was a big success story last year, but which has witnessed a sales decline of nearly 8% so far this year.

GM isn't the only automaker having problems early in 2014. Nissan is recalling over 1 million vehicles globally to fix a software glitch that could deactivate the front passenger airbag. The Japanese car maker is expected to begin updating the software for free by mid-April, according to the National Highway Traffic Safety Administration.

Meanwhile, despite multiple smaller recalls of Ford's (NYSE:F) Escape, sales continue to surge. The Blue Oval said retail registrations of the Escape are up 81% since 2009, which is higher than the overall industry growth.

"While Escape is a compact utility built for everyone and we're seeing strong sales across the board, sales are really being driven by these active adults in the 55- to 64-year-old range," said Erich Merkle, U.S. sales analyst for Ford, in a press release. "It's no secret baby boomers are playing a large role in the compact utility vehicle segment, and will continue to do so well into the foreseeable future."

What's good about this trend for Ford and its investors is that baby boomers have the cash and are looking to spend it on premium trims and technology options -- a profitable sales mix.

"Trendy baby boomers want to downsize their homes and their vehicles, but they're not willing to give up premium content in either case," said Amy Marentic, marketing manager for Ford's global car and crossover group.

Last year, Ford gained more market share in the U.S. than any other major automaker. It hopes to take even more share after GM's massive recall this year. 

2 stocks to buy for this surging Chinese market
U.S. automakers boomed after WWII, but the coming boom in the Chinese auto market will put that surge to shame! As Chinese consumers grow richer, savvy investors can take advantage of this once-in-a-lifetime opportunity with the help from this brand-new Motley Fool report that identifies two automakers to buy for a surging Chinese market. It's completely free -- just click here to gain access.

Daniel Miller owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information