GM’s profit plunges 83% on recall costs
General Motors said Thursday its second-quarter profit plunged 83% due to the cost of numerous recalls and the expected cost of a compensation fund for those killed or injured by a faulty ignition switch linked to at least 13 deaths.
The automaker said its net income in the quarter fell to $200 million, compared with $1.2 billion in the same period a year earlier.
The quarter included charges for the establishment of a victims’ compensation fund, which GM said could cost the company as much as $600 million, as well as an additional $874 million for the cost of repairing the nearly 30 million cars it has recalled so far this year.
The automaker’s results come after a quarter in which GM has issued myriad recalls and seen CEO Mary Barra called to testify in front of Congress multiple times. The company took a $35 million fine from the Department of Transportation and National Highway Transportation Administration, and could still be looking at even bigger charges from the Justice Department for the ongoing faulty ignition switch scandal.
GM’s (GM) revenue for the quarter was mostly flat from a year prior, with total money brought in sitting at $39.6 billion compared with $39.1 billion the year before.
On Wednesday, GM announced six new vehicle recalls, expanding beyond the ignition switch defect that has dogged the automaker for much of this year, bringing its total recall number for the year to 60 involving almost 30 million vehicles worldwide.
For much of the year, GM has been overwhelmed by a safety crisis set off by faulty ignition switches in millions of older cars that the automaker has linked to multiple deaths.