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Two More Recalls Push GM Total To 4.8 Million In A Month

General Motors announced two more recalls late Friday, bringing to 4.8 million the number of cars, trucks and SUVs the automaker has called back for repairs in the past month. The string of recalls, topped by an ignition switch problem in compact cars now linked to 13 crash deaths, has embarrassed the company and sidetracked its new CEO, who started work just over two months ago. GM has admitted knowing about the switch problem a decade ago, yet it didn't recall any cars until February. The recall delay has brought two congressional investigations and probes by the Justice Department and the National Highway Traffic Safety Administration. Late Friday night, GM announced it would recall 490,000 late-model pickup trucks and SUVs because transmission oil cooling lines weren't secured properly in their fittings. Transmission oil can leak from a fitting and hit hot surfaces, causing fires, the company said in a statement. GM said it knows of three fires and no injuries. The recall affects Chevrolet Silverado and GMC Sierra 1500 pickup trucks from the 2014 model year, as well as 2015 Chevrolet Suburban and Tahoe SUVs and the GMC Yukon and Yukon XL SUVs. All have six-speed automatic transmissions. The Silverado is GM's top-selling vehicle and an important profit center for the company. The GMC Sierra also is among GM's top sellers. Dealers will inspect the transmission oil cooling line fittings and make sure they're securely seated, at no cost to owners. Also Friday night, GM announced the recall of 172,000 Chevrolet Cruze compact cars because the right front axle shaft can fracture and separate while being driven. The recall affects cars from the 2013 and 2014 model years equipped with 1.4-liter turbocharged four-cylinder gasoline engines. If a shaft fractures, the wheels would lose power without warning and the cars would coast to a stop. GM says it has warranty reports of several dozen shaft fractures. It is not aware of any crashes or injuries. Dealers will replace the shafts free of charge. The recall allows dealers to resume selling affected Cruzes. GM issued a stop sale order on the cars Thursday night. The recall also covers about 2,500 replacement shafts used to fix manual transmission Cruzes that were recalled last September. In all, GM has recalled 4.8 million vehicles since last month, two million more than the company sold last year in the U.S.

GM program sees dealers taking on way more loaner cars

Given the volume of vehicles we're talking about, this is a significant development for GM's bottom line. Bring your car into the dealership for service, and you may need a loaner car in exchange. And with so many recalls being carried out, that means a lot of loaners – especially at General Motors dealerships. That could be one of the reasons why GM is massively expanding its loaner fleet program. While many Chevrolet and Buick-GMC dealerships have an on-site rental car location operated by a third party like Enterprise (which may or may not provide a GM vehicle), others manage their own loaner fleets. But while the range of dealerships operating such fleets was once small, reports Automotive News, the number has been growing rapidly: from the locations responsible for only 20 percent of those brands' sales two years ago to about 90 percent today. The impetus for that growth comes down to a massive expansion of GM's Courtesy Transportation Program. The initiative encourages dealers to ramp up their loaner fleet to a maximum size determined by GM, with a mix determined by the dealer itself, so that a showroom in Texas can be bolstered with a fleet of pickup trucks and a dealer in California can employ more Volt and Camaro Convertible loaners. The dealership gets a $500 credit for each vehicle its puts in its fleet, and can use those vehicles as loaners for service customers, as multi-day test drivers or to rent out separately. The vehicles remain in the dealer's fleet for 90 days or 7,500 miles, then they can be sold as used, but with new-car incentives. The dealer gets a fleet of loaners, customers get to use the loaners, try out a new car overnight or buy a barely used car with attractive incentives, and GM gets to clock more sales. But therein lies the kicker: the automaker counts the dispatch of the loaner new vehicle to the dealership as a new-car sale, which could end up distorting its sales figures. Counting loaner vehicles as sold vehicles is something of an industry-standard practice, but given the volume of vehicles we're talking about, this is a significant development for GM's bottom line. One dealership - Paddock Chevrolet in Kenmore, NY, for example - had no loaner fleet two years ago, but now runs a fleet of 50 vehicles. Multiply that by the 4,000 or so dealers GM has across America and you're talking about the potential for hundreds of thousands of these sorts of sales.

GM profits threatened by glut of pickups

Automotive News reports that General Motors may slash production or ramp up discounts in order to deal with an oversupply of pickup trucks. GM currently has more than double the standard supply of pickups, and the vehicles are threatening to dampen the automaker's profits for 2013. Typically, automakers try to sustain a 60- to 75-day supply of vehicles, but GM is currently loaded with a 139-day supply, as of last month. At the end of November, the automaker was sitting on 245,853 units.
The manufacturer says that it will adjust production accordingly before laying any incentives on the profitable pickups. Even so, there's some concern that the inventory swell could hurt the roll-out of the next-generation Chevrolet Silverado and GMC Sierra. GM actually began slowly stepping back production in August, but it's clear the company will take further action as it heads toward the end of the year and into the next. Analysts predict the automaker could reduce pickup manufacturing by nearly half in the first quarter of 2013.
That still may not be enough to keep GM from laying extra cash on the Silverado and GMC Sierra. While the company's incentive spending was down in November compared to the same month in 2011, both the Ram 1500 and Ford F-150 saw double-digit percentage increases in sales last month while the Silverado and Sierra numbers slid compared to a year prior. Incentive spending could help move more trucks and add some balance to the GM inventory surge.