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Volkswagen (VWAGY) Recalls Vehicles For Rollaway Problem

By Zacks Investment ResearchStock MarketsAug 26, 2019 09:48PM ET
www.investing.com/analysis/volkswagen-vwagy-recalls-vehicles-for-rollaway-problem-200459062
Volkswagen (VWAGY) Recalls Vehicles For Rollaway Problem
By Zacks Investment Research   |  Aug 26, 2019 09:48PM ET
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Auto recalls have been on the rise in recent years and the issue is unlikely to wane anytime soon. Recently, Volkswagen (DE:VOWG_p) AG (OTC:VWAGY) issued a recall of roughly 679,000 vehicles in the United States and 117,000 cars in Canada to fix an electrical issue that could result in a potential rollaway problem.

More on the Headlines

The German automaker revealed that silicate may build up on the shift lever micro switch, allowing drivers to remove the key from the ignition without the vehicle actually being in park. The problem could cause the vehicles to roll away unexpectedly, thereby increasing the possibility of a crash or injury.

Some of the vehicles may produce error messages and warning sounds while driving, indicating that the micro switch has failed. To correct this defect, dealers will disable the micro switch on the affected vehicles, and in its place install an additional switch and circuit board. The recall will start on Oct 11.The recall affects model-year between 2011 and 2019 including Jetta, Beetle & Beetle Convertible, Golf, Golf SportWagen, and Golf GTI. Bulk of the affected vehicles include the 2011-2018 Jetta models. All the affected models are equipped with automatic transmissions, manual hand brakes and keyless entry.

Volkswagen is not aware of any injuries associated with the issue. The company currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company has been regularly recalling vehicles to fix safety issues. Last month, it decided to recall 662,100 vehicles, comprising 2012-20 Volkswagen Passat sedans and 2018-19 Atlas SUVs for headlight alignment issues. It also recalled 27,822 of its 2015-2016 CC cars and Tiguan SUVs to fix airbag problems.

Recalls on the Rise

Frequent vehicle recalls pose a major threat to auto companies. These not only reduce consumers’ confidence in a brand, but also result in significant expenses and lower vehicle resale value.

Advanced technologies used in vehicles are resulting in more complex units, software errors and new dangers, leading to a rise in recalls. Cost-cutting measures by automakers have also led to frequent recalls.

Various auto biggies including Ford (NYSE:F) , Toyota Motors (NYSE:TM) , among others, have issued recalls this month. Recently, Toyota Motors recalled 14,000 RAV4 SUVs over faulty back up cameras. In mid-August, Ford issued a recall of more than 108,000 vehicles, including Ford Fusion and Lincoln MKZ models, over seat belt defects. A couple of weeks back, Mazda Motors (OTC:MZDAY) issued recalls for nearly 22,600 of Mazda3 sedans due to faulty rear-view mirrors. Lately, Harley Davidson issued recalls for 12,733 touring and CVO touring motorcycle with model-year between 2016 and 2019 due to the absence of rear red reflectors.

Last Words

The reports of frequent recalls of a huge number of vehicles on various grounds such as faulty airbags, non-compliance of emission norms, seat belts, etc. indicate widespread quality dispute and safety issues. The auto manufacturers need to introspect deeply in order to eliminate driving risks.

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Volkswagen (VWAGY) Recalls Vehicles For Rollaway Problem

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