The shares of General Motors Co., the largest auto manufacturer in the U.S., fell 5% on Tuesday and extended losses on Wednesday amid the new investigations against the company, which withdrew cars with defects associated with more than 10 death cases. The company cut the number of deaths associated with its cars from 13 to 12. General Motors Co. recalled the Chevrolet Cobalt, Pontiac G5 and other models, which are no longer manufactured for the U.S. market.
The Chief Executive Officer of the company – Ms. Mary Barra has been facing difficulties due to past mistakes of her predecessors. One of the analysts, who work for AutoPacific Inc. – Mr. Dave Sullivan commented the situation in an interview, which was cited by Bloomberg: “Barra is getting her feet thrown right into the fire. There’s no way she is going to come out of this looking like some kind of hero. The best thing is to be honest and upfront and hopefully put this to bed as quickly as possible.”
Not only public disapproval is expected to mark the years that are yet to follow for the company, but also inquiries, lawsuits and government fines. General Motors Co. will face not just a Justice Department probe, but will also the Transportation Department and the Congress, as well as lawyers hired by the company to investigate itself.
As reported by the Wall Street Journal, Fred Upton, who is the Chairman of the House Energy and Commerce Committee, commented in a statement: “There are several questions surrounding this latest recall, and right now we are just looking for answers to determine what the company and NHTSA knew about these problems, when they knew it, and what they did about it.”
As the Financial Times reported, the Chief Executive Officer of General Motors Co. – Ms. Mary Barra wrote to the companys employees last week, saying: “Our companys reputation wont be determined by the recall itself, but by how we address the problem going forward. What is important is taking great care of our customers and showing that it really is a new day at GM.”
One of the spokesmen of the company – Mr. Greg Martin, refused to make any comments on the situation. He only said that General Motors welcomed the opportunity to help “parties have a full understanding of the facts”.
General Motors Co. fell by 0.94% to $34.85 a share in New York by 15:46 GMT, marking a one-year change of +22.77%. The companys shares have fallen by 15% through yesterday since its post-bankruptcy high of $41.53 reached on December 17th. According to the Financial Times, The 15 analysts offering 12 month price targets for General Motors Co. have a median target of $48.00, with a high estimate of $52.00 and a low estimate of $35.00. The median estimate represents a 36.44% increase from the previous close of $35.18.
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