Volkswagen Recalls 13,000 Cars for Fire Hazard and Automakers Face Production Disruptions

Strategic Insights -

Volkswagen has issued a recall of nearly 13,000 1999 Jetta and Golf sedans sold in the United States and Canada due to a potential fire hazard in the car interior. The recall is a response to a test that discovered the issue, which involves a piece of soundproofing material that could ignite when a seatbelt tensioning device is activated during a collision. Volkswagen has no reports of accidents or injuries linked to the problem, but owners are being notified by mail to remove the material from their cars. Meanwhile, the automotive industry is facing production disruptions, including a significant drop in U.S. auto plant output, which is expected to fall 8.9 percent this week, primarily due to an explosion at a Ford Motor Co. complex.

Key Takeaways:

  • Volkswagen is recalling 13,000 1999 Jetta and Golf sedans sold in the United States and Canada due to a potential fire hazard.
  • The recall involves removing a piece of soundproofing material from the car interior pillars, which connect the body to the roof.
  • There have been no reports of accidents or injuries linked to the problem.
  • The affected vehicles are 1999 Jetta and Golf four-door models sold in the United States (11,585 units) and 1999 Jettas sold in Canada (1,385 units).
  • Ward's Automotive Reports estimates the total U.S. auto plant output this week at 346,936 units, a 8.9 percent drop from last week's production.
  • General Motors Corp. is loosening ties to its $28 billion-a-year automotive components unit, Delphi Automotive Systems, by spinning off or splitting off the rest of the company to its shareholders later this year.
  • Delphi, the world's largest auto supplier, with 200,000 workers, is expected to increase its business with other automakers as an independent company.
  • Detroit Diesel Corp. has ended its four-year agreement with Volvo Penta marine engines and will no longer sell Compact and 6-16 liter inboard diesel engines and parts.
  • Detroit Edison has filed plans with the Michigan Public Service Commission for steps to meet electrical demand this summer, including adding new, natural-gas-fired generating units and seeking contracts to buy additional electric capacity.

Statistics:

  • 13,000: Number of cars recalled by Volkswagen due to a potential fire hazard.
  • 11,585: Number of 1999 Jetta and Golf four-door models sold in the United States that are affected by the recall.
  • 1,385: Number of 1999 Jettas sold in Canada that are affected by the recall.
  • 346,936: Estimated total U.S. auto plant output this week, a 8.9 percent drop from last week's production.
  • 8.8 percent: Increase in North American production this year compared to the same period last year.
  • 3 percent: Predicted increase in peak demand for electricity this summer.
  • $28 billion: Annual revenue of Delphi Automotive Systems.
  • 200,000: Number of workers employed by Delphi.

Sources:

  • UPI, "VW recalls 13,000 cars for fire hazard" (Feb. 5)
  • Ward's Automotive Reports, "Auto production to drop in the United States" (Feb. 5)
  • UPI, "GM loosens grip on Delphi Automotive" (Feb. 5)
  • Detroit Diesel Corp., "Detroit Diesel Drops Volvo Penta Marine Engines" (Feb. 5)
  • Detroit Edison, "Detroit Edison takes steps for summer" (Feb. 5)