Shares in auto giant Stellantis (STLA) steered in the right direction today despite a recall of hundreds of thousands of vehicles over gear safety fears.
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Cable Bushings
The U.S. National Highway Traffic Safety Administration (NHTSA) said today it had opened a recall query into about 299,000 vehicles from Stellantis, whose brands include Chrysler, Dodge and Fiat, 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.
The NHTSA said Fiat Chrysler in April 2019 had issued a recall on certain Dodge Dart vehicles produced between February 2012 and October 2014 in order to replace the bushing. The updated part prevented deterioration from chemicals, oils, and solvents.
However, the NHTSA received 44 consumer complaints alleging worn, misadjusted or detached shifter cables after the recall remedy was completed.
Reputational Hit
The NHTSA said its Office of Defects Investigation launched the latest investigation to evaluate whether the original recall fix was effective, determine what caused the bushing failures, and explore any other factors that could impact how the shifter cable functions.
Only last week 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.
Is STLA a Good Stock to Buy Now?
On TipRanks, STLA has a Hold consensus based on 4 Buy, 10 Hold and 1 Sell ratings. Its highest price target is $15.33. STLA stock’s consensus price target is $11.65 implying a 13.99% upside.
