Costs of 60 Recalls Cuts GM's Second Quarter Profits

Request An Appointment ยป

GM's faulty ignition switch problems, together with all other recalls so far on 29 million vehicles, though only 22 million in second quarter, cut second quarter loses by 80%. The pre-tax losses claimed come from several fronts, though all involve the recalls. $400 million, so far, has been put into a fund to compensate victims of the faulty ignition switch, 13 dead to date and many accidents. Ken Feinberg is administering the Fund. Feinberg also administered both the 9/11 Fund and BP oil spill Fund. Claims are being accepted for GM's Fund beginning August 1 until the end of the year. The Fund itself may grow to $600 million or more, with no apparent limit placed on it. 

Included in the pre-tax losses claimed are one million repair kits shipped out on recalls, costs of actual repairs, $875 million for what is being called "recall expenses" and the list goes on. GM's second quarter profits are stated at $0.2 billion for the second quarter. Absent this history making number of 60 recalls and consequences of them, GM's profits would have been up this year from what they were second quarter of last year.

Where Does GM Go From Here?

GM stepped up with an internal investigation resulting in what is being called the Valkus Report, after its author, Anton Valkus, former US Attorney. The 315 page report cites "a pattern of incompetence and neglect" at GM resulting in precisely what has happened. With the Justice Department's continuing its investigation into why GM took so long to deal with this ignition problem when it had been discussed internally for quite some time, GM's financial woes may not be over. If wrongdoing is found by the Department of Justice, fines could be in the billions.

No Comments

Leave a comment
Comment Information

Schedule A Free, No-Risk Consultation

We accept all cases on a contingency basis, meaning that if you do not win, we do not get paid. As our client, you will incur no out-of-pocket costs.

Complete and submit the form to get started today.

Visit Our Office

The Law Office of Robert L. Starr
23901 Calabasas Rd, Ste 2072
Calabasas, CA 91302

Phone: 747-777-9335
Fax: 818-225-9042
Map & Directions

Privacy Policy | Business Development Solutions by FindLaw, part of Thomson Reuters.