From Bloomberg News
DETROIT — General Motors Corp., Toyota Motor Corp. and two other U.S. carmakers have in six months exceeded the vehicle recalls for last year, reducing profit.
GM recalled 7.92 million cars and light trucks as of July 2, and said repair costs had helped cut first-quarter profit in North America by 18 percent. Toyota recalled 367,000 Highlander sport-utility vehicles, surpassing last year’s total by 74 percent. DaimlerChryslerAG’s Chrysler and Honda Motor Co. also are ahead of 2003.
Recalls are rising as automakers introduce the most new vehicle models in a decade, and profit is squeezed by low-cost financing and higher rebates to win buyers.
“It is very worrying for any manufacturer to have so many recalls,” said David Champion, director of automotive testing at Consumer Reports magazine. “They have been rushing cars to market quicker than they used to. There is more cost-cutting going on. We think it will hurt their reliability data over the next year.”
Higher recall costs in the first quarter contributed to a drop in GM’s North American profit to $451 million, the company said. GM added $1.48 billion to reserves for recall and warranty claims linked to sales and recalls. The Detroit-based company recalled 7.36 million vehicles in 2003.
“Are we concerned with the number of recalls? Absolutely,” said Kevin Williams, GM’s vice president of quality for North America. “We know it is not an out-of-control condition.”
The company recalled 3.66 million Silverado and other pickups in March, the largest total this year, to repair a tailgate chain that breaks.
GM has 46 percent of U.S. recalls so far this year, almost double its market share. The company remained in third place in the J.D. Power & Associates initial quality survey behind Toyota and Honda. Ford Motor Co., the No. 2 U.S. automaker, has recalled 1.69 million vehicles in 2004, less than half its 2003 total.
New recalls were announced Wednesday by Ford of 171,300 vehicles, including 92,000 2003-model F-Series pickups and Excursion sport-utility vehicles, to repair engines that can catch on fire.
Ford also is recalling 53,500 of its 2003-model Ford Crown Victoria and Lincoln Town Cars used in commercial fleets such as taxis, spokesman Glenn Ray said. The rear axle shaft can bend or crack, putting stress on the wheel bearing and causing the rear axle to stop turning.
A third recall includes 25,800 of the 2004 model Ford Taurus, Mercury Sable and Thunderbird cars because defective welding can cause the front seat to become loose and rattle.
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