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Volkswagen (VWAGY) to Recall 143,000 SUVs Over Airbag Defect

Volkswagen VWAGY is working on front passenger-side faulty sensor that can switch off the airbag system in a particular situation. VW will recall 143,000 Atlas SUVs once it develops a remedy to fix the issue. Until then, the manufacturer has advised the owners not to let anyone occupy the affected seat.

According to National Highway Traffic Safety Administration, the issue is “sporadic.”

Modern vehicles have weight sensors in the front seat to detect the occupant's weight riding on the seat. If a small child is riding in the passenger seat, the airbag switches off because a forcefully inflated airbag may injure the child in a crash. But in case of a faulty sensor, the airbag may get deactivated due to false detection, depriving the front seat passenger of the airbag protection during a crash.

The cause of the problem is still a mystery for the manufacturer. However, the manufacturer has identified the models affected by the issues. Model years 2018-2021 Atlas and 2020 Atlas Cross Sport are the affected vehicles that will be recalled once the manufacturer finds a solution to fix the issue. The owners will be notified via mail and the repair will be done for free.

According to VW’s spokesperson, the company is unaware of any injuries related to the defect.

Last year, despite global economic headwinds, VW managed to register strong results. Even though overall deliveries declined by 7% to 8.3 million vehicles, the company’s revenues rose 12% on a year-over-year basis. The revenue growth was underpinned by a positive product mix and cost advantages. The operating margin grew 8.1% in 2022.

VW is a market leader in the BEV segment in Europe and is strengthening its presence in China with robust demand for its e-model range. It recorded a 26% growth in BEV deliveries in 2022. This year, the manufacturer is geared to launch new models that will act as tailwinds to improve the BEV share in overall deliveries further. With its new lineup and a strong order book of 1.8 million vehicles, Volkswagen is well positioned to deliver strong growth in the subsequent years.

Zacks Rank & Key Picks

VWAGY currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few more top-ranked players in the auto space are Geely Automobile Holdings Limited GELYY, BYD Company Limited BYDDY and Ferrari N.V. RACE, all of which sport a Zacks Rank #1.

Geely is engaged in automobile manufacturing and related areas. The Zacks Consensus Estimates for GELYY’s 2023 sales and earnings imply year-over-year growth of around 57.5% and 7.4%, respectively.

BYD is engaged in the research, development, manufacture and distribution of automobiles, secondary rechargeable batteries and mobile phone components. The Zacks Consensus Estimate for BYDDY’s 2023 sales implies year-over-year growth of around 175%.

Ferrari is engaged in designing, manufacturing, and selling sports cars. The Zacks Consensus Estimates for RACE’s 2023 sales and earnings imply year-over-year growth of around 14% and 19.8%, respectively.

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Geely Automobile Holdings Ltd. (GELYY) : Free Stock Analysis Report

Ferrari N.V. (RACE) : Free Stock Analysis Report

Volkswagen AG Unsponsored ADR (VWAGY) : Free Stock Analysis Report

Byd Co., Ltd. (BYDDY) : Free Stock Analysis Report

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