General Motors Company (GM) has asked the owners of its plug-in electric hybrid Chevrolet Volt to return their cars for free repairs that will lower the risk of battery fires.
Both GM and National Highway Traffic Safety Administration (NHTSA) revealed that the battery fires are caused by coolant leaking from the damaged plastic casing around the batteries after side-impact collisions when they undertook a series of crash tests. However, no owners have reported any fire accidents in the vehicles.
GM has decided to add steel to the plates protecting the batteries to guard them from side collisions. It will also add a sensor to monitor coolant levels and a bracket to help prevent overfilling the battery with coolant.
The Volt has a T-shaped, 400 pound (181 kilogram) battery pack that can power up to 35 miles (56 kilometers). After that, a small gasoline generator kicks in to run the electric motor. It has a base price of about $40,000.
The automaker will repair 8,000 Volts that are already on the U.S. roads as well as 4,400 units of the vehicles that are yet to be sold. The free repairs are covered under a “customer satisfaction program” run by GM and are similar to a safety recall.
The program will save the company from federal monitoring that comes with a recall and result in bad publicity. GM doesn’t want to put Volt’s reputation at stake in the presence of competition with Nissan Motor’s (NSANY”>NSANY) Leaf.
Last year, GM sold 7,671 units of Volts, falling short of its target of 10,000 units. However, Nissan Leaf outdid Volt by selling 9,674 units in the same year.
This is the second time in a week that GM has announced to fix their vehicles. Last Friday, the automaker announced that it would recall about 5,000 units of its subcompact car Sonic due to missing front brake pads in some of the vehicles. Among them, 4,296 were sold in the U.S. and 577 in Canada. The problem was first detected by the automaker while doing warranty service on a Sonic.
Automotive safety recalls were brought into focus by media after Toyota Motors’ (TM) announcement of the largest-ever global recall of 3.8 million vehicles in September 2009, triggered by a high-speed crash that killed 4 members of a family.
Later on, a string of recalls has led Toyota to face numerous personal injury and wrongful death lawsuits in federal courts. The Transportation Department of U.S. also imposed a fine of $48.4 million on the company due to late recall of millions of defective vehicles.
Since the beginning of 2010, GM recalled more than 3 million vehicles in the U.S., Canada, Mexico and South Korea. Among these, the largest recall was made in June 2010, involving 1.5 million vehicles, in order to fix a problem with a heated windshield wiper fluid system that has been causing fire in the vehicles.
GM, a Zacks #4 Rank (Sell) company, posted an 11% decline in profit to $1.74 billion in the third quarter of the year from $1.96 billion in the same quarter of 2011. Nevertheless, on a per share basis, the profit of $1.03 was higher than the Zacks Consensus Estimate of 99 cents and compared with $1.20 in the third quarter of 2010.
The decline in profit during the quarter was attributable to lower interest income and other non operating income (net), loss on extinguishment of debt and income tax expense.
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