General Motors (NYSE:GM) has recalled nearly 1 million sport utility vehicles (SUVs) in the U.S. due to the risk of the driver’s air bag inflator exploding during deployment. The news came as the National Highway Traffic Safety Administration (NHTSA) demanded the recall of 67 million air bag inflators manufactured by ARC Automotive Inc. citing a safety defect.
Defective Air Bag Inflators
The 994,763 vehicles recalled by General Motors cover its Buick Enclave, Chevrolet Traverse, and GMC Acadia vehicles from model years 2014 to 2017. The company said that it is taking this action “out of an abundance of caution.” Further, the Detroit-based automaker assured that the driver air bag modules in the affected vehicles will be replaced by the dealer.
General Motors disclosed that on March 24, 2023, the company received an allegation that the driver’s air bag inflator in its 2017 model Chevrolet Traverse ruptured during deployment. General Motors and NHTSA inspected the vehicle on April 25 and concluded that the allegation was true. The company added that it is aware of two prior ruptures of ARC-manufactured air bag inflators in its 2015 model year Chevrolet Traverse vehicles.
“Air bag inflators that project metal fragments into vehicle occupants, rather than properly inflating the attached air bag, create an unreasonable risk of death and injury,” warned NHTSA. The agency noted that Delphi [acquired by Autoliv (ALV)] manufactured about 11 million of the inflators under a licensing agreement with ARC, which manufactured the remaining inflators.
Aside from General Motors, NHTSA’s product recall request also includes ARC air bag inflators used in vehicles manufactured by BMW (DE:BMW), Chrysler-parent Stellantis (STLA), Hyundai Motor (HYMTF), Kia Corp., and others. NHTSA commenced its probe of ARC’s air bag inflators in 2015. The probe was upgraded in 2016 after the driver of a Hyundai vehicle in Canada allegedly died due to the ARC inflator rupture. Overall, the potentially defective inflators have been linked by the NHTSA to two deaths and injuries in other cases in the U.S. and Canada.
The matter could take a legal turn as ARC said that it “strongly disagrees” with NHTSA’s “tentative conclusion” about a safety defect in 67 million driver and passenger air bag inflators produced during the 18-year period through January 2018. Nonetheless, ARC intends to work with NHTSA and automakers to evaluate ruptures.
Is GM Stock a Buy?
Wall Street is cautiously optimistic on General Motors stock, with a Moderate Buy consensus rating based on seven Buys and four Holds. The average price target of $50.82 suggests about 57% upside. Shares have declined by about 4% year-to-date.