General Motors Co. share price down, faces new questions about recalls

The explanation of General Motors Co. why it is expanding the recall of models made between 2008 and 2011 is being questioned by congressional investigators. Yesterday the company announced that it is withdrawing more vehicles. In addition, General Motors Co. has more than doubled the costs estimates of the recalls during the first quarter.

As the company itself revealed, it is planning to withdraw 1.3 million vehicles, the most recent of which are manufactured in the period 2009-2010. The new withdrawal is considered to make the current Chief Executive Officer Mary Barra face hard times and scepticism. Ms. Barra is said to be put under pressure as she testifies before the energy and commerce committee about the safety of General Motors vehicles.

Ms. Barra apologized for the situation, but she also emphasized on the fact that the company is working in a different way than before.

As the Financial Times reported, the Chief Executive Officer of General Motors Co. said in its prepared testimony: “I would like this committee to know that all of our GM employees and I are determined to set a new standard.”

Last week General Motors Co. announced that the ignition switches of its Chevrolet Cobalt and HHR, Pontiac Solstice and Saturn Ion and Sky offered in the U.S. would be replaced due to the fact that switches with defects may have been used in the process of vehicle repair.

As reported by the Wall Street Journal, because of this, some of the Committee members said that the company has “never acknowledged that switches that do not meet GM specifications were also installed in model year 2008-2011 vehicles”.

They also explained: “GMs recall notice for the 2008-2011 vehicles makes no mention of this fact. To the contrary, it states that the cars were recalled because inadequate switches may have been used to repair these cars, not because inadequate switches were installed during production.”

The Chairman of the House Energy and Commerce Committee – Mr. Fred Upton also made a statement, which was cited by Bloomberg. He said: “Lives are at stake, and we will follow the facts where they take us as we work to pinpoint where the system failed.”

General Motors Co. fell by 0.89% on Monday in New York to settle the session at $34.42, marking a one-year change of +23.72% and a market value of $55.21 billion. According to CNN Money, the 17 analysts offering 12-month price forecasts for General Motors Co. have a median target of $47.00, with a high estimate of $52.00 and a low estimate of $35.00. The median estimate represents a +36.55% increase from the last price of $34.42.