General Motors Co share price up, widens vehicle recall to 2.6 million cars due to faulty parts

General Motors Co announced on Friday it will expand its global faulty ignition switch recall by 971 000 cars, which were allegedly built with safe parts, but may have been fitted with defective replacements during repairs.

The recall, which began in February with 1.6 million cars and was now widened by 60%, was linked to the deaths of 12 people, but GM announced yesterday that the death toll rose to 13 people after a fatal car accident last year in a 2007 Cobalt in Quebec. A GM spokesman however said that no fatalities or injuries are linked to the latest round of recalls.

Karl Brauer, senior analyst at Kelley Blue Book, said, cited by Bloomberg, that although the second expansion of the recall is unlikely to replace many faulty components, it helps demonstrate GMs new more-responsive approach to any customer risk.

The recall, which now totals 2.59 million vehicles, includes all model years of the Chevrolet HHR, Chevrolet Cobalt, Saturn Sky, Saturn Ion, Pontiac G5 and Pontiac Solstice made between 2003 and 2011. The older versions of those models that were produced between 2003 and 2007 were recalled last month. The company also said it is pulling back about 95 000 faulty ignition switches that were sold to dealers and after-market wholesalers, 90 000 of which were used for repairs.

General Motors said that the vehicles manufactured after 2007 were fitted with a redesigned ignition switch, but some of the cars might have been repaired with older parts that could be defective.

In the US alone, the recall is being expanded by 824 000 vehicles to 2.2 million. GM admitted that it knew of problems with some ignition switches and possible linked problems dating back to 2001, but has failed to organise recalls or sound the alarm with regulators.

The defect, which can cause the cars engine to shut down and cut off its power steering and power breaks, as well as prevent the airbags from deploying in a crash, is linked to the deaths of 12 people in 31 crashes where airbags didnt deploy.

GM Chief Executive Officer Mary Barra said in yesterdays statement: “We are taking no chances with safety. Trying to locate several thousand switches in a population of 2.2 million vehicles and distributed to thousands of retailers isn’t practical.”

Ms Barra is due to testify on Tuesday before the House of Representatives about the recall and its progress, and whether the recalled cars are safe to drive. Owners of the vehicles due to be pulled back will be notified in the week of April 21 and will receive the replacement for free at dealers as soon as the spare parts become available.

Ms Barra said yesterday, cited by Bloomberg: “I want to start by saying again how sorry I am personally and how sorry General Motors is for what has happened. Clearly lives have been lost and families are affected, and that is very serious. We want to just extend our deep condolences for everyone’s losses.”

General Motors Co rose by 0.64% on Friday in New York and closed the session at $34.73 per share, marking a one-year change of +24.84% and a market capitalization of $55.21 billion. According to CNN Money, the 17 analysts offering 12-month price forecasts for General Motors Co have a median target of $47.00, with a high estimate of $52.00 and a low estimate of $35.00. The median estimate represents a +35.33% increase from the last price of $34.73.