GM stock has dropped about 49 percent from the 2021 ATH as the automaker struggles to make a deal with the UAW Union amid a possible recall of over 1 million vehicles for faulty airbags.
General Motors Company (NYSE: GM) shares closed Thursday trading at $30.31, down 2.35 percent from the day’s opening price. The company’s stock value has been declining since early last year, with a high chance of revisiting COVID-19 lows if the company does not revert to the situations at hand. Notably, thousands of members of the Union Auto Workers (UAW) union went on strike last month after failing to reach a deal on a new labor contract.
Earlier this week, the company noted that its dealers delivered 674,336 vehicles in the United States during the third quarter, up approximately 21 percent YoY. However, this quarter’s production could significantly be hampered by the ongoing UAW union strike that has taken longer to resolve.
The situation with GM production could be facing much bigger challenges after a report by WSJ highlighted that at least 20 million vehicles delivered to customers could have faulty airbags. The US National Highway Traffic Safety Administration raised an alarm of possible recall to avoid any injury or deaths.
Currently, the company has recalled 1 million vehicles believed to have airbag issues and reiterated that there is no basis for more recalls. Nonetheless, the company indicated that it is closely working with the NHTSA and other manufacturers to ensure a long-term solution to the airbag problem.
“Neither the affected automakers nor NHTSA, despite eight years of study and investigation, have identified a systemic design or manufacturing defect in ARC frontal airbag inflators,” the company noted. “If GM concludes at any time that any unrecalled ARC inflators are unsafe, the company will take appropriate action in cooperation with NHTSA.”
General Motors (GM) and the Market Outlook
In a bid to reinstate its normal operations, General Motors confirmed that it had made a counteroffer to the UAW union. This is after the company indicated that it has lost about $200 million due to the ongoing strike. However, the UAW union has constantly refused to make any deal until its contract is fully fulfilled, hence worsening the impasse.
“We believe we have a compelling offer that would reward our team members and allow GM to succeed and thrive into the future. We continue to stand ready and willing to negotiate in good faith 24/7 to reach an agreement,” the company recently noted.
The $42.71 billion company is facing intense competition from established electric vehicle companies like Tesla Inc (NASDAQ: TSLA) that do not support the UAW union. As a result, the company’s stock market faces more selling pressure in the coming quarters which could significantly reduce its valuation.