Analyst Warns of Trouble for General Motors

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General Motors announced it is recalling more than 1 million compact cars in North America due to a power steering problem that has been linked to 14 crashes and one injury.

Leading analyst George Magliano says cost cutting and streamlining are responsible for the safety recalls.

[George Magliano, Director of Automotive Research, IHS Global Insight]:
"…It is the way the market has gone in order to build a better car and to build a better car and conserve costs. This is an issue."

Magliano warns that the problem may get bigger.

[George Magliano, Director of Automotive Research, IHS Global Insight]:
“Recalls are going to be more prevalent, recalls are going to be bigger…no manufacturer can afford to let the least problem go by the boards and try to downplay it. They need to work with the safety administration, they have got to get out there, they have to get out in front of this."

U.S. safety regulators opened an investigation in late January into approximately 905,000 General Motors' Cobalt models in the United States. More than 1,100 complaints of power steering failures were reported.

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