Recalls Take Hit on GM
The numbers have been heading in the wrong direction for General Motors. Figures released this morning indicate the automaker’s earnings dropped more than 85% in the first quarter.
The Detroit News is reporting today that GM earned a mere $125 million for the first three months of this year. The sales numbers are offset by a more than $1 billion dollar bill to replace faulty equipment.
The figures also indicate while the automaker has been extremely profitable for 17 consecutive quarters, troubles with recalls–and specifically those related to faulty ignition switches linked to 13 deaths–plunged profits by 85.5% in the first quarter of 2014.
The report indicates recall costs hurt earnings by 48 cents a share. There are no solid indications, though, that the costs will hurt the automaker’s worth moving forward.
GM Chief Financial Officer Chuck Stevens told reporters in Detroit on Thursday that it’s too early to tell whether there will be additional recall costs. The extent of potential financial settlments with families of victims of the safety breakdown won’t be known until next month at the earliest.
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