GM Stock (GM) Stagnates as Massive Vehicle Recall Sparks Fire Risk Concerns

Another day, another recall—GM's stock flatlines after safety crisis hits the road.

Thousands of vehicles yanked off the market as fire risks ignite investor anxiety. The auto giant's shares barely flinch—because what's a few flaming cars when you've got quarterly earnings to massage?

Wall Street shrugs while Main Street fumes. Classic.

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Short Circuit

The National Highway Traffic Safety Administration said that GM was recalling 62,468 Chevrolet Silverado vehicles over a risk that the brake pressure sensor assembly may leak brake fluid into the switch and cause a short circuit.

An electrical short can generate excessive heat and could result in a fire, risking injury, NHTSA said. It added that an underhood fire may occur even when the vehicle is switched off or possibly unattended.

The defect was caused by the use of an unauthorized chemical by the supplier of the brake assembly that caused a part to degrade over time, the agency said.

The recall covers certain 2019-2024 Chevrolet Silverado vehicles. About 1% of the recalled vehicles are expected to have the defect.

Owners are advised to park their vehicles outside and away from buildings until repairs are completed, with dealers replacing the brake pressure switch wire harness at no cost.

Recall Woes

Back in April this year, GM announced a global recall of about 721,000 SUVs and trucks due to potential engine defects that could lead to a loss of power and increase the risk of accidents. This recall, also announced by the National Highway Traffic Safety Administration (NHTSA), affected Cadillac, Chevrolet, and GMC models, spanning the 2021 through 2024 model years.

This followed an investigation initiated by the NHTSA in January, which covered 877,710 GM trucks and SUVs. GM recalled these vehicles due to defective 6.2L V8 engines, which could suffer from crankshaft and connecting rod failures, leading to engine damage or total failure.

GM has been working to address safety concerns, but recurring engine and mechanical failures reflect ongoing challenges in the company’s quality control and manufacturing processes.also undermines consumer confidence in the brand.

Is GM a Good Stock to Buy Now?

On TipRanks, GM has a Moderate Buy consensus based on 9 Buy, 7 Hold and 2 Sell ratings. Its highest price target is $65. GM stock’s consensus price target is $50.84 implying a 5.63% upside.

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