DETROIT General Motors Co (GM.N) said on Friday it had told its dealers to stop selling certain Chevrolet Cruze small cars without saying why, in another blow to a company already facing a crisis over defective ignition switches linked to at least 12 deaths.
The automaker said the affected Cruze cars, 2013 and 2014 models equipped with a 1.4-liter turbo engine, are not being recalled. The action only covers the affected models that are unsold on dealer lots, which make up about one-third of the vehicle's inventory at dealers, a GM spokesman said.
The 1.4-liter gas turbo engine accounts for about 60 percent of the Cruze's retail sales mix in any given month, a GM spokesman said. The vehicle also is sold with a 1.8-liter gas engine and a 2-liter diesel engine.
"With GM still in the midst of trying to resolve the recall related to faulty ignition switches on the Chevrolet Cobalt and other legacy models. The last thing they need is a major issue with one of their current high volume production models, in this case, the Chevrolet Cruze," said Kelley Blue Book senior analyst Alec Gutierrez.
Last year, Cruze sales rose 4.4 percent to 248,224 vehicles, making it the 12th strongest selling vehicle in the U.S. market, according to Autodata. Through February, Cruze sales this year were up 19 percent.
"I can just confirm that we put a stop-sale in last night," GM spokesman Alan Adler said.
He said he did not have any details on why the action was being taken, but said stop-sale orders can happen for various reasons. He said stop-sale orders mean the dealers need to do something to the vehicle before it can be sold.
Last month, GM recalled 1.6 million older-model cars globally to replace defective ignition switches that can be knocked out of the "run" position while driving, turning off the engine and disabling airbags and electrical components.
GM Chief Executive Mary Barra is scheduled next week to testify before the House of Representatives and Senate, whose members seek to learn how the problem did not result in a recall earlier despite being first noted within the company in 2001.
One Chevrolet dealer, who asked not to be identified, confirmed the alert to stop selling the 1.4 liter turbo models but said no further details had been provided by GM.
GM shares were up 44 cents, or 1.3 percent, at $34.95 in midday trading on the New York Stock Exchange.
(Reporting by Ben Klayman in Detroit; Editing by Alden Bentley and Andrea Ricci)