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General Motors: driving in circles

GM temporarily stopped production of some new 2004 models on Friday.

March 16, 2004 5:22 PM GMT (Datamonitor) - Turnaround efforts in Europe and the US could bring General Motors [GM] a more positive 2004. The manufacturer is counting on its new Astra model to increase its sales in the old continent. However, GM's efforts to improve on its reliability image come to nothing every time a vehicle recall or production stop is in the press.

For the first time in 25 years, US car manufacturers have outranked their European rivals and positioned themselves behind Asian manufacturers at the top of the 2004 Consumer Reports reliability category. For the Big Three, 2004 should be the year that will see a reverse in declining US market share.

However, Asian manufacturers are now targeting more profitable segments such as SUVs and pickup trucks while continuing to carry the concept of quality and reliability. This means that the problems for GM, Ford [F] and Chrysler [DCX.F] are not over. To compete it is crucial for domestic US manufacturers to further improve reliability.

General Motors is working very hard to improve its image and change customer perception, however, quality problems keep occurring. Following three recalls last February, GM is now recalling over 93,000 Oldsmobile Aurora sedans because of a fuel leak that could cause fire. The manufacturer also temporarily stopped distribution from its assembly plant on Friday due to a problem that could cause transmissions to fail in some of its 2004 SUVs and pickup trucks.

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