Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



General Motors Just Made Another Huge Mistake

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

The first quarter has not been a friendly one to the nation's largest auto manufacturer, General Motors (NYSE: GM  ) . But the company's actions in the past few days may be the biggest catalyst for consumers to think negatively of GM.

Recall blues
For various reasons, faulty ignition switches in a number of GM vehicle models can be jostled out of the "run" position and into "accessory" or "off," which can disable power steering, power brakes, and airbags. Needless to say, its a dangerous situation for drivers -- more than 30 accidents and 12 deaths have been linked to the safety hazard. But he recall of over a million vehicles for faulty ignition switched is old news now.

Even the recent announcement from General Motors that it's expanding the recall to include newer model years isn't terribly concerning, since the company is taking a precautionary stance. The expansion is due to ignition switches sold to parts stores and dealer repair shops that may have been used on the newer vehicles during repairs.

The company has announced that replacement ignition switches will be available starting on April 7 for all model years of its Chevrolet Cobalt, HHR, Pontiac G5, Solstice and Saturn Ion and Sky, with all vehicles repaired by October of this year.

Customers are urged to follow the following instructions for the recall process:

Source: General Motors.

With the company taking huge steps to try to assuage customer concerns, including posting videos of CEO Mary Barra answering questions about the recall, one act may have just undercut any progress GM has made in rebuilding consumer confidence.

Cease and desist
On Friday, GM dealers received a stop-sale order from the manufacturer for the 2013 and 2014 Chevy Cruze, halting all sales of the vehicle. Though it's not uncommon for an automaker to halt sales if a safety concern needs to be fixed, General Motors omitted any information on why the stop-sale was necessary.

While dealers expect more news on the order early in the week, the lack of details may be enough to reinforce customer concerns about all GM vehicles. Though the company has assured consumers that the Cruzes that have already been sold are safe, there's little information for drivers to use to reassure themselves that the automaker is telling the whole story.

The biggest hit
There's no doubt that General Motors is in for a long run with the ignition switch recall -- not only with the actual repairs, but with and subsequent lawsuits and possible criminal investigations.

While safety concerns about any automaker's vehicles can be a business killer, the biggest problem with the GM recall debacle is the company's withholding of important information. First, the company takes 10 years to disclose the ignition switch problem, resulting in more than 2 million vehicles in question. Now, two current-year models of a popular vehicle are suspect.

Reputation counts for a lot within the auto industry, and with the recent stop-sale order lacking any information GM's may be taking another hit. But giving customers and investors a full weekend (or more) to hypothesize about the Cruze's problems, General Motors has really shot itself in the foot.

The Motley Fool's completely free car buying guide
You may not be considering a new GM vehicle these days, but the market is full of great cars ready to hit the road. But car buying can be a difficult activity, and there's plenty of data showing that you probably spent thousands more than you should have on your last vehicle. In fact, the auto industry can be such a dangerous place for consumers that our top auto experts are determined to even the playing field. That's why they created a brand-new free report on The Car Buying Secrets You Must Know. The advice inside could save you thousands of dollars on your next car, so be sure to read this report while it lasts. Your conscience, and your wallet, will thank you. Click here now for instant access.

Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 31, 2014, at 3:23 PM, RadWriter wrote:

    Obviously, the author knows nothing about automobiles. Shutting off the ignition does not disable the power brakes for almost every single car on the road. The power assist comes from that big aluminum canister at the bulkhead just behind the master cylinder. If the engine shuts off, the canister retains enough vacuum to fully assist three or four uses of the brakes.

    While the engine shutting down will disable power steering, the effect on effort will be negligible at highway speeds. Steering effort will become unmanageable only at parking maneuver speeds, less than say 5 MPH.

    So, before spreading nonsense and panic, you might want to check into your assumptions and facts.

    BTW, almost all cars have suffered from ignition failure due to heavy key chains. While this may affect a lot more cars and more electronic subsystems, this is nothing particularly new.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2896024, ~/Articles/ArticleHandler.aspx, 8/31/2015 5:53:19 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Jessica Alling

Contributing writer for covering the financial sector with an emphasis on the insurance industry.

Today's Market

updated Moments ago Sponsored by:
DOW 16,528.03 -114.98 -0.69%
S&P 500 1,972.18 -16.69 -0.84%
NASD 4,776.51 -51.82 -1.07%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/31/2015 4:00 PM
GM $29.44 Up +0.44 +1.52%
General Motors CAPS Rating: ***