It seems like every week brings another big new recall from General Motors Company (NYSE:GM).
So far this year, GM has issued 44 (and counting) separate recalls covering over 20 million (and counting) vehicles in North America. But a new report from investigators working for the U.S. House of Representatives made a troubling point: Very few of those vehicles have been fixed so far.
As Motley Fool senior auto specialist John Rosevear explains in this video, only about 155,000 of the 2.6 million vehicles in the recalls that started this whole mess -- those for defective ignition switches in the Chevy Cobalt and other cars made last decade -- have been fixed.
As John notes, there are good reasons why GM hasn't been able to move faster. But at this pace, GM's dealers may be digging through the recall backlog for years.
A transcript of the video is below:
John Rosevear: Hey Fools, it's John Rosevear, senior auto specialist for Fool.com.So we've been hearing for months and months about these General Motors recalls. As I record this for you on Thursday, GM is up to 44 separate recalls in North America so far this year covering over 20 million vehicles, and that number could increase by the time you watch this. Of course it's not really 20 million vehicles as several models have been recalled more than once, but it's still an awful lot.
We know why GM is doing this, the big scandal over their long-delayed, ignition-switch recall for the old Chevy Cobalt and other compact models from the last decade has made GM's new CEO, Mary Barra, want to err on the side of extreme caution for a while when it comes to recalls. She wants everything that might ever need to be recalled for any problem whatsoever taken care of now, so that GM can get through this mess and recover its momentum.
But now there's a new challenge for GM emerging, and that's getting all the vehicles that have been recalled for all of these defects actually fixed. Before Mary Barra's big appearance before Congress on Wednesday, congressional investigators reported that of the 2.6 million vehicles recalled for that serious ignition-switch defect that is being blamed for at least 13 deaths and 42 crashes, of those 2.6 million vehicles only about 155,000 have been repaired.
The supplier of the kits to repair them is Delphi Automotive (NYSE:DLPH), and Delphi has so far shipped just under 400,000 of the kits. The problem is apparently that the switches have been out of production for some time, so GM and Delphi had to resetup the assembly lines from scratch, and that has taken some time.
GM said this week that it is in the process of adding a third assembly line, and those lines are working around the clock, three shifts, and they expect to have the last of the kits needed for this recall shipped by the end of October.
So GM has a long long way to go here before it actually gets all those old cars fixed, and this is going to take months, and it's going to take months for GM's dealers and parts suppliers to work through all of these other recalls as well. So this story, this scandal, isn't going away any time soon.
But of course it's an opportunity for GM's dealers, too, when they have all these people coming in who maybe they haven't seen before, or haven't seen in years, and they can show them GM's new models, which are much improved over a lot of these cars that have been recalled, and maybe this whole mess has a little bit of a silver lining for GM aside from giving Mary Barra the ammo she needs to fix a lot of lingering problems inside GM.
It's going to be interesting to see what the long-term effect is here, but one thing's for sure and that's that we're going to be talking about this for quite a while longer. Thanks for watching.
John Rosevear owns shares of General Motors. The Motley Fool recommends General Motors. 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.