Recalls slash GM's second-quarter profit; victims fund gets $400M
Automaker still manages to post $200M profit.
General Motors has posted its second-quarter earnings, revealing the financial impact of the ongoing recall campaigns.
The automaker took a $1.3-billion hit related to the recall repairs, pushing profit down by 85 percent compared to the same three-month period in 2013.
Despite the significant funds allocated for fixing defects, the company still managed to stay in the black with a comparatively meager net income of $200 million.
"Our underlying business performance in the first half of the year was strong as we grew our revenue on improved pricing and solid new vehicle launches," said CEO Mary Barra.
GM has maintained seemingly strong sales numbers amid the ever-growing recall campaigns for tens of millions of vehicles. The company's growth rate has fallen behind competitors, however, hinting at a potential decline in overall market share.
The latest financial disclosures also reveal that $400 million has been set aside for victim compensation. There is "no cap" on the program, and it may increase by approximately $200 million or more, but the initial allocation represents the company's "best estimate" of settlement costs that will be paid to claimants.
The latest quarterly results also include a $900 million charge that serves as the estimated costs of future possible recalls for up to a decade, suggesting the company is preparing to wind down its flurry of regular recall announcements.