General Motors Company (NYSE: GM) will recall approximately 5.9 million vehicles over faulty airbag inflaters as per orders from the National Highway Traffic Safety Administration (NHTSA), the Wall Street Journal reported Monday.
The NHTSA earlier concluded that certain makes of Takata airbags pose a risk of exploding or being deployed improperly, affecting vehicles of several automakers.
What Happened: The NHTSA ruled out GM’s petition to turn down the recall order on Monday. Since 2016, GM has approached the safety authority multiple times to suspend the forced recall order, claiming that its vehicles were safe based on independent evaluations. GM says its tests revealed that in approximately 67,000 instances, the airbags were deployed safely, WSJ noted.
The automaker is now required to share its recall plans with the federal body within the next 30 days detailing a schedule to notify vehicle owners and replacing the defective parts. “We disagree with NHTSA’s position. However, we will abide by NHTSA’s decision and begin taking the necessary steps”, the company said.
Models manufactured between 2007 to 2014 comprising of Sierra HD, Sierra LD, Yukon XL, and Yukon (2007-2013) are part of the callback. Some other vehicles in the list include models of Cadillac Escalade and Chevrolet.
Why Does It Matter: The Journal says that complying with the NHTSA diktat could lead to a potential $1.2 billion hit on GM’s income statement.
The defective Takata airbags have impacted almost 19 other automakers in the U.S. based on the NHTSA website. The list includes Ford Motor Company (NYSE: F), Bayerische Motoren Werke ADR (OTC: BMWYY), Audi, and Ferrari NV (NYSE: RACE), Honda Motor Co Ltd (NYSE: HMC).
Earlier this month, GM had to recall 68,000 Chevrolet Bolt due to concerns of a fire hazard. There were reported instances of models built between 2017 and 2019 with LG Chem-supplied batteries catching fire.
Price Action: After a 4.02% gain during Monday’s trading hours, GM stock rose by an additional 1.52% in the extended trading hours to close at $45.45.
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