DETROIT - General Motors Co is recalling 1.3 million compact cars in North America to address a power steering problem that has been linked to 14 crashes and one injury, the company said on Tuesday.

U.S. safety regulators opened an investigation on Jan. 27 into approximately 905,000 Cobalt models in the United States after receiving more than 1,100 complaints of power steering failures.

The recall covers the 2005-2010 model year Chevrolet Cobalt and 2007-2010 Pontiac G5 in the United States; 2005-2006 Pontiac Pursuit sold in Canada, and the 2005-2006 Pontiac G4 sold in Mexico, GM said in a statement.

GM said it told the U.S. National Highway Traffic Safety Administration about the voluntary recall on Monday after concluding its own investigation that began in 2009.

GM said the affected vehicle can be still be “safely controlled” but it may require greater steering effort under 15 mph. Drivers will see a warning light and hear a chime if the power steering fails.

“After our in-depth investigation, we found that this is a condition that takes time to develop. It tends to occur in older models out of warranty,” GM Vice President of Quality Jamie Hresko said in the statement.

“Recalling these vehicles is the right thing to do for our customers’ peace of mind,” he said.

GM said it is currently developing a remedy to fix the problem and will notify customers when the plan is finalized.

GM spokesman Alan Adler said Monday it will take time for the automaker to get 1.3 million new power steering motors from the supplier, JTEKT Corp., and GM will notify car owners when the parts are available.

Heightened scrutiny after Toyota recalls
The recall comes at a time of heightened public and regulatory scrutiny over vehicle safety issues in the wake of massive recalls by Toyota Motor Corp.

Toyota global quality control chief Shinichi Sasaki and North American President Yoshimi Inaba are scheduled to appear before a Senate committee on Tuesday for a third hearing on its handling of consumer complaints about sudden acceleration

Source (article): MSNBC

Source (picture): NYTIMES

General Motors’ fourth quarter earnings report is simply breathtaking. Not in a 1960 Corvette kind of way. Think 1961 Corvair.

GM reports losing $9.6 billion at the end of last year. The company lost $30.9 billion for all of 2008. Throw in all of GM’s charges and you are looking at a loss of nearly $85 million a day. It’s a loss of $3,700 for every vehicle GM sold around the world last year. That’s not red ink. That’s the Red Sea.

It was no accident that three hours after GM reported its earnings CEO Rick Wagoner and the rest of GM’s top management went to the Treasury Department for a meeting with President Obama’s Auto Task Force.

“Today’s meeting with the presidential task force on autos was just the beginning of the hard work ahead for GM and the president’s team,” GM said in a statement shortly after the daylong sit-down.

Wagoner has already asked for $16 billion more in government loans to help GM survive what has become the worst crisis in company history.

“They probably need twice that”, says John Wolkonowicz of IHS Global Insight. “But if you compare that to what a government financed structured bankruptcy would cost – about $100 billion for GM – it’s still cheaper than bankruptcy.”

It’s not unreasonable to think that sound’s like a devil’s bargain. But to be fair, GM was gaining some momentum early last year. Granted, the company made bad decisions for years and depended far too long on highly profitable and gas-guzzling SUVs. However, the company was preparing to roll out its strongest product line-up in years. What nobody could predict at GM’s Renaissance Center headquarters was the Dark Ages was just around the bend. Within six months, gas prices skyrocketed to $4.00 a gallon, the credit markets had a nervous breakdown and unemployment shot up 2 percent. Unfortunately for GM, the airbags did not deploy.

Can General Motors be a viable business while hemorrhaging billions every week? It’s the central question in the Detroit drama. Some analysts believe GM can pull a U-turn if it continues to get government help and at meets least three conditions:

• First - GM has to make cars people want to buy.

• Second - GM needs relief from its labor agreements.

• Third - The economy must begin to improve quickly.

GM has already made great improvements in vehicle quality and dependability. Most of its vehicles are just as good as Japanese makes. In the upcoming April auto issue, ConsumerReports gives a number of GM cars and SUVs high marks – including the Cadillac STS, the Buick Enclave and the Chevy Malibu. The electric plug-in Chevy Volt sparks the imagination and the new Chevy Camaro pumps the adrenaline. Another year or two of vehicles like them and GM could gain some traction with Generation X and Y.

GM and the UAW are already deep in negotiations to amend the union’s labor contract. The healthcare entitlements in the contract for GM retirees are simply burying the company. It is horrible that UAW members who have dedicated their lives to GM are now being asked to give back valuable benefits. But the reality is the benefits package would be among the first things torn to shreds by a bankruptcy judge. The UAW leadership knows it. The trick will be convincing the membership.

The third condition that would make GM viable is something beyond their control. Nobody knows how long it will take for the recession to end. The auto industry is on pace to sell 10 million cars and trucks in 2009. Any annual sales rate below 12 million units cannot sustain General Motors, Ford and Chrysler. The most optimistic annual sales estimates the 12 million unit rate is achievable no earlier than 2010.

“So GM needs a bridge over this water to get them to 2010, when the stimulus package kicks in,” says Wolkonowicz. “These auto companies are salvageable. Getting them through this horrible year will prove to be the right decision, but they will need an indeterminate amount of money over and indeterminate amount of time.”

SOURCE: CBS NEWS

We’ve heard from politicians, analysts and commentators with their predictions on what will happen to the automakers. Now let’s hear from someone who makes a living looking into a crystal ball.

Shala Kilmer, a Beverly Hills, Mich., psychic, makes a few predictions that don’t sound much different from those who wear ties and appear on CNBC.

• “Over the protests of the American public and their congressional representatives, more federal aid will be poured into the United States auto industry. No one wants a deeper recession, and the reality that the auto industry needs to be rescued will sink in for most people as the year goes on.”

• “The amount of money needed to save the car companies will probably exceed $200 billion.”

• “GM will experience much turbulence in the year ahead, but it will survive. The new GM will be less top-heavy — a lighter and faster vehicle. It will eventually be an example of how to streamline a huge company to get things done.”

• “The UAW ranks of autoworkers will also be thinned. Transparency and making the best decision for the company’s survival will dictate who stays and who goes.”

• “Chrysler will not survive 2009 whereas GM and Ford will survive to become the Big Two. No one will pick up Chrysler; it’s a Ford Pinto kind of risk at this time.”

SOURCE: FREEP.COM