By on July 25, 2014

GM Renaissance Center

In today’s General Motors digest: The automaker takes it on the chin in its quarterly report; the analysts have their say; GM Korea could allow its workers to build the next Cruze if only they would put down the picket signs; 45 attorney generals are investigating the February 2014 recall; and CEO Mary Barra will be the keynote speaker for a connected-vehicle forum.

Autoblog reports GM made a net income of $200 million for Q2 2014, in comparison to $1.2 billion during Q2 2013. Speaking of $1.2 billion, that was how much the automaker paid in recall-related repairs this quarter, with a $900 million charge ready for future recall campaigns. Finally, $400 million has been set aside for the Feinberg compensation plan, though $200 million may be added down the road.

Meanwhile, Automotive News collected a number of analyst quotes regarding the poor Q2 2014 showing, including KBB.com’s Jack Nerad proclaiming that while the automaker may be handling recalls better these days, “it is paying for past sins in terms of the bottom line.” Michael Krebs of AutoTrader.com adds that GM “would have had an outstanding quarter” were it not for the ongoing recall parade, and both Brian Johnson of Barclays Capital (but not of AC/DC) and Morningstar’s David Whiston believing brighter days ahead in Europe and outstanding success in China.

Speaking of the Asia-Pacific, GM Korea management informed the employee’s union that if the latter calls off its impending strike over stalled wage negotiations, the next-gen Chevrolet Cruze would be built in its Gunsan facility. The factory — where the Orlando and current-gen Cruze are assembled — is one of four under GM Korea, and boasts a production capacity of 260,000 units per year.

Back at home, The Detroit News reports GM is under investigation by 45 attorney generals over the February 2014 ignition switch recall, as well as auto safety agency Transport Canada. On the federal level, CEO Mary Barra stated she hasn’t met with the prosecutors or the grand jury regarding the U.S. Attorney’s Office and the Securities and Exchange Commission investigations into wire and bankruptcy fraud related to the automaker’s 2009 bankruptcy proceedings.

Finally, Barra will be the keynote speaker at the 21st World Congress on Intelligent Transport Systems in Detroit September 7. The event, focused on connected vehicles, will attract 10,000 guests from 65 countries to share and discuss ideas, challenges and strategies regarding the burgeoning scene. Barra’s keynote will focus on the future of intelligent transportation.

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24 Comments on “Latest GM Recall Woes Hurt Q2 Results...”


  • avatar
    thelaine

    Other than that, the news is good.

  • avatar
    CoreyDL

    I feel like there’s a reason all these night time shots of downtown Detroit have no people in them.

    If you’re alone at night in that particular location, is robbery/murder likely?

  • avatar
    jpolicke

    “GM “would have had an outstanding quarter” were it not…”

    And the Titanic would have had an outstanding maiden voyage were it not for the iceberg.

    • 0 avatar
      thelaine

      These cars would be of outstanding quality if not for the defects.

    • 0 avatar
      Dr. Kenneth Noisewater

      And Mr. Lincoln would have had a lovely time at the show were it not for Mr. Booth.

      Incidentally, it looks like the Volt has managed to steer clear of all these recalls? I didn’t see it listed among them anywhere.. I guess it got its recalls out of its system already (battery case hardening, missing brake parts, etc).

  • avatar
    Rday

    GM builds very good cars as long as they are left at home in the garage. Otherwise you risk your life along with others when these vehicles are taken on the street. I really like some of their styles but I hate having to put up with all of their poorly designed products.

  • avatar
    el scotto

    “On the federal level, CEO Mary Barra stated she hasn’t met with the prosecutors or the grand jury regarding the U.S. Attorney’s Office and the Securities and Exchange Commission investigations into wire and bankruptcy fraud related to the automaker’s 2009 bankruptcy proceedings.” Or Paybacks for the Bailout; it’ll get ugly.

  • avatar
    PriusV16

    “CEO Mary Barra will be the keynote speaker for a connected-vehicle forum.”

    …..provided she’ll make it there alive in her GM car…..

    >B-]

  • avatar
    mikey

    PriusV16….Such wit! Get yourself a stand up act, man.

    FYI You need some new material. That one has been used before. many times.

  • avatar
    Lou_BC

    “provided she’ll make it there alive in her GM car”

    She would most likely travel in an airplane and since Mulally saved Boeing shouldn’t she be thanking the former CEO of Ford?

  • avatar
    Jeff S

    The news just keeps getting better for GM. It remains to be seen what GM’s future is, but hopefully GM will get this behind them. If not maybe GM needs to be taken over by another. Ford would be a good candidate. I am not anti-GM as I currently own a GM product and have not had these problems, but the culture of GM needs to change in order for GM to survive.

    • 0 avatar
      thelaine

      Jeff S:

      “It remains to be seen what GM’s future is, but hopefully GM will get this behind them…I am not anti-GM….the culture of GM needs to change in order for GM to survive.”

      I agree with all of this, but it makes one cynical to have read virtually identical words over and over and over again since the 1970s. Ford finally got Mulally and, whatever the gripes, I believe he saved that company. So, as long as GM exists, there is hope a great leader may come along.

      Still, what is happening now is business as usual. GM has always made great cars and shtty cars, just like now. Barra? She was picked, IMO, because she can be trusted not to lay out the people who are responsible for this ignition fiasco. Nobody wants to go to jail or be personally liable for a bunch of money. Her job is to protect her homies at GM.

      After every car GM has ever made is recalled and this latest Oldsmobile Cluster Supreme is in the rearview mirror, she will be replaced and paid off handsomely for her omerta. A “new era” of quality, safety and customer-first accountability will begin. Again. GM will be the leader. Again. A new world-beating line of cars will be announced. Whatever.

      Sure thing guys. Instead, GM will continue to lurch along, making great cars and shtty cars. Savvy GM buyers will have to pick carefully, like they are in the produce section at the supermarket.

      Still, I don’t expect GM ever to die, at least not before the US does. I think we crossed the Rubicon (mmmmm…Rubicon) with the bailout. GM is a National company now, psychologically. When they need another bailout, they will get it, and people will rush to say the circumstances are “unique” and “unprecedented” whatever they turn out to be.

      So I still love you GM but you are a lying, faithless bitch who has cost me money and grief. If you live, that will be great. If you die, I will not shed a tear.

  • avatar
    Jeff S

    @thelaine–Exactly, I agree with your statements. I was hopeful that GM would learn from this and become a better and stronger company, but in order for that to happen its culture needs to be removed like a cancerous tumor. Barra is the fall person left to take the blame. GM has some really great products in its pipeline but improvements in their quality are questionable. I realize that cost is important, a manufacturer cannot afford to not contain costs but when something goes wrong then corrective action should be taken quickly and those responsible should be held accountable. Quality needs to be the Number 1 priority along with customer service. I do not see GM dying but I do see it being either taken over by another manufacturer or becoming a foreign based corporation (possibly Chinese).

  • avatar
    mikey

    Jeff & thelaine …. I can’t help but agree with both of you ,in your analysis . Though I may “shed a tear” along with about 30 percent of my pension ,were GM to go belly up. I am very much aware of the culture that existed at GM. Writing as one ,with a dog in this fight, I was hoping that the culture at the “new GM” would radically change. To a certain extent , it has. From what I see as a retiree , there’s still a lot of room for improvement.

    When Mulally came to Ford , he didn’t have to worry about who he p….sed. off. Bill Ford handed the reins of his families company over. A gutsy move , that probably saved Ford. Mr M proceeded to clean house. The same culture that killed GM ,was alive and well at Ford . Mulally dismantled it ,because he wasn’t burdened down with a list of protected species . As a low life hourly, I personally witnessed incompetence , nepotism , empire building ,and some of the most inept management ,promoted . The writing was on the wall by early 2008. . I also saw many very talented , highly educated bail out to greener pastures. Talk about brain drain!

    All that being said. I do see some of the best product GM has produced on the market today . I had a new 09 LTZ Impala , a little spartan, and somewhat dated, however it was flawless,and I know what to look for. I had brand new 11 2ss Camaro . Maybe not the right car, for a guy my age. The build quality was second to none.

    Today I drive a 2014 Impala LT , with a 2.5 litre. I can say,without hesitation ,it is the nicest car I have ever owned. I get compliments wherever I go. And yes it has been recalled.

    • 0 avatar
      thelaine

      I guess we are having an agreement-fest today Mikey, because I’m with you on your comments. Also, the Corvette. It is not a car for me, but I do not think you can get more performance for the dollar and you cannot slam it for interior, cheap materials, handling, fit and finish or anything else anymore. The Corvette team is a bunch of animals and someone at GM finally let them loose. I also love the Chevy SS. I know it is Aussie, but convicts need jobs too. I think GM pickup trucks are as good as any, depending on what you are looking for. I’m certain there are more examples, and those who would take exception.

      The larger points we both made still stand. It is awfully discouraging to see the butt-covering going on at the top. Mary was obviously brought in to keep everybody from losing their jobs. The deck chairs get reshuffled. Business as usual. Cocktails at 4:00. Tell those guys at the dashboard parts supplier we need a 6% price cut or we are going elsewhere. And on and on it goes.

      I did not work for GM, I have just watched in anger and frustration as one of the world’s greatest companies has fallen to its knees. And no, I do not think it was inevitable. It was self-inflicted and most of it, even the horror of the corpulent, malevolent labor union zombies, was the fault of management. That problem has not been solved.

  • avatar
    Jeff S

    @mickey–I agree. I have a 99 S-10 extended cab with a 2.2 I4 with a 5 speed manual that has been overall a good solid vehicle for over 15 years and a 2008 Isuzu I-370 I crew cab that has been good as well. Yes I have had issues with body hardware but then all the manufacturers have cheapened the body hardware along with putting more hard plastics in the interior. Nothing is build to last forever but when a serious defect exists the manufacturer needs to have a process to expediciously deal with it. The culture of GM needs to do a 180. Having owned a variety of different vehicles from GM, Chrysler, Ford, Honda, and Mitsubishi they all have their strengths and weaknesses. The ideal vehicle would take the best of all the various manufacturers. I realize that the perfect vehicle will never exist but a vehicle should be overall safe, economical, reliable, and last a reasonable amount of time (10 years).

  • avatar
    Lou_BC

    Corporate culture is extremely difficult to change. You can’t fire every single middle and upper management bozo sucking oxygen from the air and contributing nothing more than CO2 and heat in exchange for a pay cheque.
    I worked at the same facility directly and indirectly for 30 years and the same mistakes keep getting made, the CEO’s came and went, managers got canned when new CEO’s took oever but the place still has all of the same stupid issues occurring.
    I’m amazed I stayed there for that long but the front line work was interesting and stimulating and even a stint in management was good until the CEO burned herself out in two years trying to change the culture. I tried as well but all I got was a bad reputation with the rest of management. It never hurt me and was great because they all left me alone.

    • 0 avatar
      thelaine

      Agreed Lou, and I really wonder how often it has been done with a giant like GM. Ford had an advantage because the change just had to be radical when it went from family to outside control. The real leader was Bill Ford, who sucked it up and really handed over control – an incredibly bold move. He exposed many people he knew very well in order to save the company. He also picked the right person at the right time to do the job. I have a ton of respect for him. Amazing.

      I think companies like GM just keep on lurching along until they get nationalized or dismantled and gobbled up, like JeffS suggested. It has already happened to many American car companies – most recently, to my recollection, American motors and Chrysler.


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