A report about a potential recall is pushing down GM stock. GM headquarters in Detroit.
Bill Pugliano/Getty Images
Shares of
General Motors
sank Thursday after The Wall Street Journal reported that the National Highway Traffic Safety Administration wants some 20 million GM (ticker: GM) vehicles recalled to replace potentially faulty air bag inflaters.
In May, GM recalled about 1 million vehicles for the same issue. The supplier, ARC Automotive, didn’t believe the parts were faulty and didn’t want to recall some 67 million vehicles for various manufacturers that NHTSA wanted fixed.
The number has grown to 20 million for GM, according to The Journal article. That’s probably why GM shares were down 3.2% in Thursday trading at $30.04 apiece while the
S&P 500
and
Dow Jones Industrial Average
were both almost flat.
NHTSA also wants 52 million air bag inflaters replaced in cars of other auto makers. Other automotive stocks aren’t really being impacted, and it isn’t clear why.
Toyota Motor
(TM) stock is up 2.2% despite being mentioned in The Journal article.
NHTSA said it wasn’t providing a breakdown by manufacturer. Toyota didn’t immediately respond to a request for comment about the recall.
“GM believes the evidence and data presented by NHTSA at this time does not provide a basis for any recall beyond the approximately 1 million ARC inflaters GM has already recalled out of an abundance of caution,” GM said in an emailed statement. “Neither the affected auto makers nor NHTSA, despite eight years of study and investigation, have identified a systemic design or manufacturing defect in ARC frontal air bag inflators…The safety of our products is the highest priority for the entire GM team.”
ARC, the part manufacturer, didn’t immediately respond to a request for comment.
Recalls typically don’t matter much to investors. They are a part of doing business. Millions of cars are recalled every year in the U.S.
Recalls that cost billions to fix or impact safety, however, do impact stocks. A Chevy Bolt battery recall cost billions but ultimately that cost was borne by GM battery supplier
LG Energy Solution
(373220.Korea)
The cost or severity of the air bag inflation issue isn’t known yet.
Still, investors hate uncertainty. That’s one reason they are selling GM stock on Thursday.
Write to Al Root at [email protected]
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