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General Motors Corporation (PinkSheets: MTLQQ) Recalls 1.5 Million Vehicles

|Includes: Motors Liquidation Company (MTLQQ)

As part of their bankruptcy reorganizations, GM and Chrysler announced plans to shed nearly 2,800 dealers last year. GM had around 6,000 U.S. dealers when it went into bankruptcy protection, and planned to have only 4,100 dealers across the country in July. However, GM North America President Mark Reuss told The Associated Press today that the company should wind up with about 5,000 dealers in July. This decision reflects a shift in strategy from GM’s previous regime and will save thousands of jobs (with an average of 50 people working at a new-car dealership). GM wants to avoid the expense and time of the closures, and Reuss feels shedding dealers isn’t critical for GM to achieve profitability.

Today, General Motors Co has announced a recall of about 1.5 million trucks, crossovers, and cars from model years 2006-2009. With GM’s decision to keep the 900 dealerships it originally intended to cut loose, the company will better be able to suite the customers’ needs in this matter. The unit that heats the windshield washer fluid in these vehicles could catch fire, a feature used to allow larger vehicles to better eliminate ice and snow on windshields. This isn’t the first time this washer system was recalled. In August 2008, the heated water system was recalled because of a short circuit, and dealers installed a fuse in the module wiring to fix the problem. In June 2009, GM discovered a new failure in the system which caused smoke, and has since received 5 reports of the system causing a fire.

In an estimated time of 20 minutes, GM will remove the unit that heats washer fluid, because the supplier who made the module has stopped manufacturing. In addition, the company will pay each customer $100 when the fluid module is removed at dealerships. Therefore, if all 1.5 million customers collect the $100 payment for loss of the heated washer feature, payouts to consumers would total about $150 million.

The models involved include the 2007-2009 model year Chevrolet Silverado 3500 pickup truck, Avalanche, Suburban and Tahoe; Cadillac Escalade, Escalade ESV and Escalade EXT; GMC Acadia, Sierra, Yukon and Yukon XL; and the Saturn Outlook. The recall also covers the 2009 Chevrolet Traverse, the 2008-2009 Buick Enclave and Cadillac CTS, and the 2006-2009 Buick Lucerne, Cadillac DTS and Hummer H2.

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