Shares in auto giant Stellantis (STLA) edged higher today despite having to issue yet another recall of thousands of its vehicles over safety fears.
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Pump Problems
The U.S. National Highway Traffic Safety Administration (NHTSA) said Stellantis, whose brands include Chrysler, Dodge and Fiat, is recalling 53,849 vehicles over potentially faulty fuel pumps.
The recall covers certain 2017-2018 Alfa Romeo Giulia and 2018-2019 Alfa Romeo Stelvio vehicles; the auto safety regulator said.
The vehicles had fuel pumps that may fail, which could cut off fuel flow and drive power, increasing the risk of a crash. Owner notification letters will be mailed by October 29, according to the NHTSA.
This is the latest in a series of recalls that have battered Stellantis this year. As one can see above, it is the key risk for the business and investors.
Recall Issues
In July, Stellantis said it was recalling 121,398 vehicles in the United States due to a safety issue with head restraints.
The NHTSA announced that the affected vehicles have head restraints that may not lock properly, which could increase the risk of injury to seat occupants during a crash.
Also in July, the NHTSA said it had opened a recall query into about 299,000 vehicles from Stellantis after receiving complaints about faulty shifter cable bushings.
A bushing, usually made of rubber, connects the shifter cable to the transmission system, allowing the vehicle to change gears. If the bushing is damaged or missing, the vehicle could move in an unexpected and unhelpful direction.
In June, Stellantis said it was recalling 250,651 vehicles in the U.S. due to an improperly sealed side curtain air bag.
Other recalls this year include 235,640 Ram ProMaster vans with faulty rearview camera systems, 33,777 Ram 1500 trucks with headlight failure issues and 10,396 Ram 1500 pickup trucks with tire pressure monitor errors.
At a difficult time for the auto industry given tariff uncertainty and faltering consumer confidence, this spate of recalls is an unwelcome hit to brand reputation. It could also be a factor in Stellantis’s faltering share price this year – see above.
Is STLA a Good Stock to Buy Now?
On TipRanks, STLA has a Hold consensus based on 4 Buy, 13 Hold and 2 Sell ratings. Its highest price target is $14.12. STLA stock’s consensus price target is $10.64, implying a 10.49% upside.
