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Here Comes Another Gigantic Airbag Recall

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Good Morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important stories you need to know.

1st Gear: More Airbags, More Problems

As if the Takata airbag mess wasn’t enough for consumers, here comes another massive recall for defective ‘bags—this time from German supplier Continental. Reuters (via Automotive News) reports 5 million U.S. will be recalled from various manufacturers, but the exact models haven’t been announced yet.

Continental AG’s recall of 5 million vehicles in the U.S. for defective airbag control units includes models from Daimler, Fiat Chrysler and Honda, a company spokesman said.

Continental Automotive Systems is recalling the vehicles to replace airbag control units built over a five-year period that may be defective, according to documents made public today.

The Germany-based supplier told the U.S. National Highway Traffic Safety Administration that the electronic systems built from 2006 through 2010 and used in the 5 million vehicles may fail and airbags may not deploy in the event of a crash.


As soon as we get a list of affected cars, we’ll get it out to you.

2nd Gear: Also A Big Honda Accord Recall

Hey guess what? MORE RECALLS! This one’s kind of airbag- and moisture-related too, much like the Takata problem. Here’s Automotive News again:

Update: A NHTSA official has confirmed to us that this recall is actually for the Continental problem in 1st Gear. So we know one model affected by that issue.

Honda Motor Co. said it will recall 341,000 Accord sedans in the United States to replace an electric control unit used in its restraint system after confirming two injuries linked to the units.

The recall, which affects the model years 2008-2010, is due to moisture affecting the units, which can result in the possibility that airbags may not deploy in the event of a crash, Honda said in a statement today.

Honda said a new restraint system control unit (SRS) will be installed for free.

3rd Gear: Wall Street Is Down On GM

Like Ford, General Motors is having a hard time convincing Wall Street that it’s really past the mess of the bailouts and bankruptcies, and that it won’t get tanked by another economic downturn. Even as GM posted a record profit for 2015, shares are still down, reports Reuters:

GM shares fell as much as 5 percent, even as Chief Executive Officer Mary Barra and Chief Financial Officer Chuck Stevens told investors on a conference call that any downturn in U.S. auto sales is still several years away. The automaker’s shares closed Wednesday at $28.92, down 2.5 percent for the day and almost 13 percent for the year.

“The bears argue the U.S. auto industry has peaked and is ready to roll over,” Stevens said on the call. GM is positioned to stay profitable even if U.S. car and truck sales fall to 10 million to 11 million vehicles from the current rate of over 17 million vehicles a year, he said.

Efraim Levy, an S&P Capital equity analyst, said while he did not agree, he understood the bears who fear U.S. auto sales will peak in 2016 and that “people are afraid that we’re going to have a recession or some other drop-off in sales, and that that’s going to hurt margins.”


Automakers argue things are rosy and great and that cheap gas will drive record auto sales well into 2016. Investors and analysts aren’t so optimistic, it seems.

4th Gear: GM Won Big With Discounts

Speaking of GM, while the company recently posted its best January sales in nearly a decade, Bloomberg’s here with a “not so fast” take on why that happened: huge discounts.

The part that GM left out: It also gave customers bigger discounts than any other mass-market automaker last month at an average of almost $4,100 a vehicle, according to Autodata Corp. Ford Motor Co. spent $3,053. Fiat Chrysler Automobiles NV’s U.S. unit spent $3,846 and even Volkswagen AG, with sales slumping from its diesel-emissions scandal, spent just under $3,500 per vehicle, the Woodcliff Lake, New Jersey-based researcher said.

GM’s aggressive start to the year helped the automaker gain a little market share, especially with big offers on some slow-selling Buicks. The main strategy was to clear out inventory of some older new models that are being replaced with an all-new design, like the Chevy Cruze compact car and Cadillac SRX sport utility vehicle.

A bad habit to have, but obviously GM’s not hurting in the profit department these days.

5th Gear: Great Time To Work At Daimler

Mercedes-Benz’ parent company Daimler has posted record profits too, and that’s been a nice boost for workers. From the AP:

German car and truck maker Daimler has reported record profits for last year as sales of its luxury cars rose despite a troubled global economy.

And that means more cash for investors and workers.

The company is raising its dividend to 3.25 euros ($3.60) per share, from 2.45 euros. It will also pay profit-sharing of 5,650 euros ($6,215) for each of the 125,000 eligible workers in Germany, with the money to appear in their April paychecks.


Reverse: Lincoln!


Neutral: Are You Bullish Or Bearish On The Auto Industry?

Are things great or are automakers not primed for the next downturn? They better hope gas stays cheap, that’s for damn sure.


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