General Motors Recalls Prompt Stock Dump

General Motors American automotive giant General Motors has recently been forced to issue a number of recalls due to various manufacturing defects, and this spate of recalls has prompted prominent investment experts, such as the analysts at Berkshire Hathaway, to dump their stocks in the company. The recent spate of defects has been enormous, with over 30 separate defects discovered across different models in the General Motors line. For example, the Chevrolet Aveo was recently recalled due to concern over the possibility of the daytime running light module overheating and catching fire. This particular recall, which pertains to Aveos built between 2004 and 2008 will affect a total of approximately 218 000 cars. It brings the annual figure for recalls to 13.8 million, a figure that shatters the previous annual record of 10.75 million set by General Motors in 2004. Furthermore, although spokesman Alan Adler insists that no injuries or deaths have been reported because of this particular defect, analysts are predicting that the American automotive giant could lose significant market share to its competitors, such as Toyota. General Motors current spate of recalls has been partially motivated by fines imposed by federal authorities. These fines were imposed on the American automotive firm due to its failure to recall approximately 2.6 million vehicles fitted with faulty ignition switches, a problem that allegedly led to the death of 13 people. Mark Reuss, the product development chief at General Motors, has been reported as saying that this new vigilance in searching out defects will lead to an increase in the frequency of recalls, but a reduction in the overall number of recalled vehicles. Fortunately, for General Motors, the recent recalls do not seem to have affected sales adversely, at least according to certain dealers. April Ancira, the vice president of the Ancira Motor Company dealership located in Texas, has posited that the recent recalls have served to increase consumer confidence in General Motors’ products, as the American firm seems to be prioritizing the safety of its customers. Furthermore, the total retail sales for the American automotive giant have increased three-and-a-half percent from last year, far exceeding the industry average of one half of one percent. However, these optimistic sales figures have not dissuaded analysts from prompting clients to dump General Motors stock out of concern that further recalls could have a significant adverse impact on the company. For example, Berkshire Hathaway sold 10 million of its shares in General Motors, approximately 25 percent of their total holdings in the company. Greenlight Capital, managed by David Einhorn, took an even more extreme stance on the issue, selling all of their 17 million shares in General Motors for an estimated value of about $700 million. This is not to say that analysts are united in this stance. Firms such as Apaloosa Management and Hayman Capital Management have recently increased the value of their positions in General Motors. This uncertainty within the financial community stems from the fact that, according to Susan Aluise of InvestorPlace, there are whispers of criminal negligence in the Senatorial subcommittee meetings regarding General Motors. Aluise asserts that these whispers, if based in reality, could prove to be a significant problem for the American automaker. It is for this reason that many investment analysts are prompting clients to dump their General Motors stocks, although some hedge fund managers have said that General Motors would present a superb investment opportunity if the rumors turn out to be unfounded. By Nicholas Grabe Sources: Daily Finance Bidness Etc InAutoNews Republican American The Market Oracle 

2 Responses to "General Motors Recalls Prompt Stock Dump"

  1. jake   May 28, 2014 at 8:58 am

    People DIED result of GM’s GREED!

  2. Jones   May 27, 2014 at 3:03 pm

    GM are garbage don’t know why anyone still buys this crap

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