GM takes huge Q1 loss amid switch recall

GM takes huge Q1 loss amid switch recall

Credit: GM Wieck

The General Motors Renaissance Center Global Headquarters displays new exterior lighting.

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by CHRIS WOODYARD

USA Today

Posted on April 24, 2014 at 6:57 AM

General Motors just reported its first losing quarter in four years, taking a $1.6 billion first-quarter hit compared to the same period last year to pay for the costs of its massive ignition-switch recall.

But the giant automaker's core business appeared to be largely unscathed. Without those one-time losses, it says it made $100 million as it remains one of the largest players in the still-healthy car business around the world.

GM has estimated that replacing the ignition switches on 2.6 million cars worldwide at a cost estimated at $1.3 billion, a figure that it has repeatedly revised upward as the recall broadened. Most of the vehicles involved are from 2003 to 2007. In addition, GM was taking a charge for the devaluation of the Venezuelan currency.

As a result of the one-time charges on diverse fronts, Barclays analyst Brian Johnson on Monday had described it as a "kitchen sink quarter" -- meaning GM would try to pile all its mistakes and fix-it charges into a single quarter.

"We believe the results of the quarter will be less relevant for investors, with the focus more on what to expect going forward," Johnson said. "It may be in GM's interest to push through additional charges now, which it will not have to face later."

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