Feds Will Investigate Potential Problems With GM’s Pickups & SUVs

Troubled American automaker GM (NYSE:GM) received bad news this week when the National Highway Traffic Safety Administration (NHTSA) announced they would begin a preliminary investigation into possible brake problems on nearly 6.2 million GM vehicles. The affected vehicles are from the company’s truck and SUV lines, including the widely popular Chevrolet Suburban and Silverado pickup trucks. Preliminary investigations such as this one by the NHTSA are often a sign of a possible recall coming in the future.

The Issue At Hand

The preliminary investigation was launched after the NHTSA received 110 complaints from drivers of GM vehicles about brake problems. Allegations of three crashes involving Silverado and Sierra heavy duty pickup trucks are also being investigated. None of the crashes resulted in fatalities or injuries. The specific vehicles in question in the investigation include the 1999-2003 Chevrolet Suburban, Tahoe, and Yukon as well as 1999-2003 model pickups including the GMC Sierra and Chevrolet Silverado. Roughly 189,000 Sierra and Silverado heavy duty pickup trucks are also under investigation.

The investigation will be focusing on possible loss of braking effectiveness due to corrosion in the brake lines. 37 of the complaints received by the NHTSA of brake line failure have been confirmed by dealerships. The NHTSA opened the investigation due to concern that brake lines were rupturing under “normal driving conditions with normal brake line pressure”.

What Is At Stake For GM

If the NHTSA’s preliminary investigation leads to a recall it could be devastating for GM. The automaker accepted publicly funded bailout money from the government last year in the face of slumping sales and massive debt. The automaker appears to have turned the corner however, announcing this week that it plans on paying back nearly $7 billion to the Federal government in June, five years ahead of schedule. However, a recall could have devastating effects on GM’s turnaround, especially in the wake of the $16.4 million civil fine slapped on Toyota (NYSE:T) last Monday by the government for its failure to act to prevent its own brake related recall issues.

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About the Author: Hoàng Kang

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