General Motors Company (GM)’s 2nd Recall in China

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General Motors Company (GM) announced its second recall in China this year. The recall covers almost 1.5 million cars produced in China by the Shanghai General Motors, General Motors’ Chinese joint venture with SAIC Motor.

The recall includes 1.2 million Buick Excelles produced from 2006 to 2012, 250,000 Chevrolet Sails manufactured from Apr 2009 to Oct 2011 and some vehicles produced in 2012. These are the most popular models of General Motors in China.

General Motors had to recall the vehicles to replace a faulty fuel-pump bracket. The Administration for Quality Supervision, Inspection and Quarantine believes that the bracket might break after extensive use and in worst cases may even lead to leakage of fuel.

However, this is not the first time that General Motors is recalling vehicles from China this year. In May 2013, the automaker recalled 2,653 imported Cadillac SRX sport utility vehicles to fix nuts on wheels. It was feared that the nuts might loosen due to torque.

International automakers are focusing on China owing to rising demand in the Chinese market. Apart from SAIC Motor, General Motors also operates in the nation with its partner FAW Group. On the other hand, Ford Motor Co. (F) has joint ventures with Changan Automobile and Jiangling Motors in China.

However, not only General Motors, other automakers too are recalling vehicles in China for several reasons. It has been reported that, Ford’s joint venture with Chongqing Changan Automobile will be recalling around 81,000 cars from China. The recall is being made due to problems in a steering part.

Furthermore, Volkswagen AG (VLKAY) issued two recalls in China in Nov 2013. One of these was a recall of 640,309 cars and minivans to replace the synthetic oil in their transmissions with mineral oil. The company believes that the use of synthetic oil might lead to electrical problems. In Oct 2012, Toyota Motor Corp. (TM) recalled 1.4 million vehicles in China as part of its massive global recall of 7.4 million.

Leading automaker General Motors currently carries a Zacks Rank #3 (Hold).

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