Auto recalls have been on the rise in recent years and the issue is unlikely to wane anytime soon. Recently, General Motors GM issued a recall of 3.46 million U.S. pickup trucks and SUVs to fix a vacuum pump issue, which is causing a brake-related problem. The recall affects Chevrolet Silverado, GMC Sierra and Yukon, Chevy Suburban and Tahoe, as well as Cadillac Escalade vehicles from the 2014-2018 model years.
The U.S. auto giant revealed that the pump in power-assist brakes can put out less vacuum power than needed, thereby resulting in a longer stopping distance and the risk of a crash. In order to fix this issue, General Motors is working on a corrective action involving reprograming of the Electronic Brake Control Module with a new calibration. This will improve the way the system utilizes the hydraulic brake boost assist function when vacuum assist is depleted.
Of late, it has been recalling vehicles in large numbers. In October 2018, the company issued a recall for more than 3.3 million vehicles in China. Last year, the Zacks #2 (Buy) Ranked firm had also issued recalls for 1.2 million pickup trucks and sport utility vehicles across the globe due to problems pertaining to power steering. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, frequent vehicle recalls pose a major threat to auto companies. These not only reduce consumers’ confidence in a brand, but also result in significant expenses and lower vehicle resale value. Ultimately, the cost of repairs in a large-scale recall and even that of compensating victims generally turn out to be lower than the cost of sales due to a tarnished reputation.
Advanced technologies used in vehicles are resulting in more complex units, software errors and new dangers, in turn resulting in a rise in recalls. Cost-cutting measures by automakers have also led to frequent recalls. Markedly, various auto biggies including Ford F, Volkswagen VWAGY and Toyota Motors TM, including others, have been issuing recalls lately.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
General Motors Company (GM) : Free Stock Analysis Report
Ford Motor Company (F) : Free Stock Analysis Report
Toyota Motor Corporation (TM) : Free Stock Analysis Report
Volkswagen AG (VWAGY) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research