The potential large warranty liability for GM is in view as the National Highway Traffic Safety Administration opened a preliminary investigation into possible engine failure on 877,710 GM SUVs and trucks.
According to NHTSA, GM customers and service centers reported a “bearing failure that may result in either engine seizure or breaching of the engine block by the connecting rod,” with no warning or detection before failure. The NHTSA said that a loss of power can increase the risk of a crash.
Vehicles Under Investigation
The following vehicles are part of the investigation:
- Some model year 2019-2024 Chevrolet Silverado 1500 and GMC Sierra 1500 pickup trucks fitted with the L87
- 2021-2024 Model MY Chevrolet Tahoe, GMC Yukon, and Cadillac Escalade SUVs, Chevrolet Suburban,
NHTSA Investigation: Scope and Impact
The NHTSA said that ODI will analyze the scope and severity of the potential issue and evaluate the defect.
The auto safety regulator further reported that there were claims filed citing failure in a bearing of the connecting rod which can make the engine either seize or even break from one side of the connecting rod itself.
Complaints and Reports from GM Vehicle Owners
Failure in the engine leads to the fact that it either loses motive power for the particular vehicle or will also enhance crash possibilities. It however shows an NHTSA report stating no crashes or fires.
The auto safety regulator received 39 complaints and some early warning reporting field reports from the owners of vehicles who also reported no detectability before engine failures.
No Reported Crashes or Fires
The agency, the National Highway Traffic Safety Administration’s Office of Defects Investigation, opened an investigation known as a preliminary evaluation. It would assess the scope and severity of the potential problem and further explore potential safety-related issues.
GM’s Response and Cooperation with NHTSA
General Motors said it will continue its cooperation with NHTSA on the issue.
GM Stock Stability Amid Engine Failure Investigation
GM Stock Overview and Market Reaction
US National Highway Traffic Safety Administration said that it has opened up preliminary evaluation to consider defects possibly connected with the V8 engine in Chevrolet Silverado and GMC Sierra pickups as well as Chevrolet Tahoe, Chevrolet Suburban, GMC Yukon, and Cadillac Escalade SUVs. Vehicles in this affected population cover model years 2019 to 2024.
GM Stock Steady But Investigation Carries A Risk
The overall effect on General Motors’ stocks is not dramatic. The stock traded at $51.89 as of 10:13 EST on January 17, 2025, after having gained only marginally from its close of $51.84 the previous day. The intraday trading range has ranged between $51.47 and as high as $52.1892.
Analysts’ Take on GM’s Stock Performance
Over the last year, the stock price of GM had ranged from a 52-week low of $34.34 to a high of $61.24. Analysts recommended buying the stock and with the mean target price at $59.63; it gives the impression that long-term prospects look bright even though short-term challenges may persist.
For example, General Motors has mixed conditions. The capitalization of General Motors is $57.06 billion with a trailing P/E of 5.54 and a forward P/E of 4.84. It has a dividend yield of 0.93% and a dividend rate of $0.48.
The debt-to-equity ratio is quite high for the firm, at 174.581, hence it is a highly leveraged company. Analysts expect a target high price of $85.00, while there is a target low of $35.00, with the median target set at $59.00. All these translate to a positive yet careful outlook on GM shares.
Financial Implications of a Potential GM Recall
Cost of Potential Recall and Impact on GM’s Bottom Line
The present NHTSA inquiry into GM’s vehicles is an important development that could impact the company’s reputation and financial performance. While the stock has remained relatively stable, the result of the probe could ieffect investor sentiment and market dynamics. General Motors must address the potential engine issues promptly to maintain consumer trust and safeguard its market position.
According to NHTSA field reports and owner complaints, the problem seems to be a potential failure of a bearing that holds the engine crankshaft and connecting rod in place.
This is not the first time that owners have complained about engine bearing failure. Last August, also a group of owners were seeking action certification for a lawsuit alleging premature failure of the bearings and seeking full engine replacements.
Previous Similar Issues and Customer Complaints
And in April GM released a “customer satisfaction program,” not technically a recall. According to reports, the company replaced some MY 2023 vehicles’ L87 engines for a few owners experiencing an issue with “oversized lifter bores,” which is considered a potential long-term durability problem.
What’s Next for GM and the Investigation?
NHTSA’s Ongoing Evaluation and Future Implications
If there was a need for a recall, then General Motors would have to correct those vehicles’ connecting rod bearings and this would involve the costs of parts associated with the engines plus labor or replacing an entire engine in its entirety should that be required for approximately 878,000 vehicles—a large cost.
According to a statement from NHTSA posted on its website, documents indicated that the failure of the vehicle’s engine may cause a loss of power and most likely lead to an increased risk of a crash due to this action. The agency has filed complaints about 39 incidents with no reported cases of injuries.
The complaining parties claim that a bearing fails which can lead to the seizing of the engine or penetration of the connecting rod into the engine block. According to NHTSA, no sign of the defect exists before the engine failure.
Potential Risks and Challenges for GM
GM responded through a statement saying it is cooperating with the examination by NHTSA.
