303 Airbag Casualties for GM - Analyst Blog

According to the research by The Center for Auto Safety, there were about 303 front seat deaths during 2003 to 2012 in General Motors Company's GM 2003–2007 Chevrolet Ions and 2005–2007 Chevrolet Cobalts in which airbags failed to deploy. The safety regulator used data from the National Highway Traffic Safety Administration's (NHTSA) Fatal Analysis Reporting System (FARS) to arrive at the figure.

However, it was not clear whether all these deaths were related to the ignition switch defect that led to the recall of 1.6 million vehicles by General Motors last month. On Feb 13, the automaker announced the recall of 778,562 Chevrolet Cobalt and Pontiac G5 compact cars of model years 2005 to 2007 in North America to fix faulty ignition switches.

It was found that a heavy key ring or uneven roads could cause the ignition switch to shift away from the run position, thereby turning off the engine and preventing deployment of front air bags in the event of a crash.

Later, on Feb 25, General Motors announced a recall of 842,000 2003–2007 Saturn Ions, 2006–2007 Chevrolet HHRs, and 2006–2007 Pontiac Solstice and Saturn Sky models in addition to the recall on Feb 13, 2014. Thereafter, the automaker has been facing heat for delaying the recall as the chronology of events filed with the NHTSA indicates that the faulty ignition switches were identified way back in 2001, during the pre-production test of the Saturn Ion.

General Motors initially attempted to avoid a recall by issuing Technical Service Bulletins for the problem in 2005. The bulletin advised putting an insert into the ignition switch of the Chevrolet HHR and Cobalt, Pontiac Solstice and G5 and Saturn Sky and Ion vehicles. However, that did not solve the problem, thus forcing the automaker to announce a recall.

General Motors is facing multiple investigations for the delay. Two congressional committees and the Justice Department will examine the reason behind the delayed recall. The NHTSA also announced an investigation into the delayed recall. Moreover, General Motors has hired a team to probe into the ignition switch recall.

Although the new General Motors, formed after bankruptcy, is not responsible for the liabilities of the old General Motors, pressure is mounting on the company to compensate the victims. The NHTSA is also facing flak for not investigating the matter earlier despite being aware of so many incidents of failure in airbag deployment.

General Motors currently holds a Zacks Rank #4 (Sell). Some better-ranked automobile stocks worth considering are Tata Motors Ltd. TTM, Daimler AG (DDAIF) and Tesla Motors, Inc. TSLA. Tata and Daimler sport a Zacks Rank #1 (Strong Buy) while Tesla is Zacks Rank #2 (Buy) stock.