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Autoliv's Faulty Seat Belts and Air Bags May Lead to Recall

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Autoliv, Inc. (ALV - Free Report) is under pressure as automakers may globally recall 400,000 vehicles which feature the company’s seat belt or air bag parts. Autoliv’s parts are used in 1,300 auto models.

Autoliv agrees to some glitch in its seat belt pretensioners, which are used to strengthen the belts and better secure a driver or passenger. These seat belt pretensioners feature in 267,000 vehicles. In case of a crash, the micro gas generator used in the seat belt pretensioners may detach and hit the vehicle cabin. Notably, the pretensioners were manufactured in the Apr 10–Oct 15, 2016 period.

Autoliv also confirmed that the air bag and seat belt initiators are defective in around 114,000 vehicles. The faulty parts in the air bags and seat belts have been manufactured in the Jul 16–Nov 4, 2016 period.

However, there is no report of any causality related to this defect. Autoliv also believes that the expenses concerning this recall will not affect its earnings as such.

Autoliv estimates the number of vehicles to be recalled will be in the range of 300,000 to 400,000. The company is working with automakers to identify vehicles with the faulty seat belt or air bag parts.
 

Price Performance

Autoliv has underperformed the Zacks categorized Auto/Truck-Original Equipment industry this year. Share price of the company lost 10.67% so far this year, while the industry saw a 4.6% increase. Projections of flat growth in China next year and guidance cut for 2016 adjusted operating margins impacted the stock price.




Zacks Rank & Other Key Picks

Autoliv currently carries a Zacks Rank #2 (Buy).

Other favorably ranked companies in the auto space include Allison Transmission Holdings, Inc. (ALSN - Free Report) , America's Car-Mart Inc. (CRMT - Free Report) and Rush Enterprises, Inc. (RUSHA - Free Report) .

America's Car-Mart sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Meanwhile, Allison Transmission and Rush Enterprises carry a Zacks Rank #2 (Buy).

Allison Transmission has a long-term growth rate of 11%.

America's Car-Mart has a long-term growth rate of 45.50%.

Rush Enterprises has a long-term expected growth rate of 15%.

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