Recalls Hammer GM Brand, Q1 2014 Profits

Cameron Aubernon
by Cameron Aubernon
recalls hammer gm brand q1 2014 profits

Autoblog reports the first several thousand kits meant for repairing a handful of General Motors vehicles affected by the February 2014 ignition switch recall have been shipped off to dealers. In addition, 1.4 million recall letters have been mailed out to affected consumers of 2003 – 2007 vehicles; 2008 – 2011 affected owners will receive their letters in the coming weeks. The letters inform consumers to schedule the repair with their dealer, which GM claims will take 90 minutes to complete. Until the repair occurs, the automaker instructs all consumers to have nothing more than the key itself prior to insertion, and to be sure their transmissions and switches are set in place before removing the key.

In other recall news, Bloomberg says plaintiffs aiming to take down the liability protections established in GM’s 2009 bankruptcy exit — on the basis of bankruptcy fraud by omitting information about the out-of-spec ignition switch at the center of the ongoing recall crisis — may find the fight difficult at best. Bankruptcy lawyers told Bloomberg that they could request pre-trial evidence from GM to prove their case, but differ on statue of limitations being a factor in moving forward with the lawsuits. In the meantime, the automaker has asked Judge Robert Gerber — who ruled in the 2009 case — to reinforce the liability shield before more lawsuits can move forward. A conference with Gerber and GM is set for May 2 in Manhattan.

As for how GM is faring under the recall crisis since it began, Detroit Free Press says the automaker’s brand had taken more damage than Chevrolet in the first weeks of the recall, according to YouGov BrandIndex’s Buzz consumer survey. The automaker’s score, determined on a scale of -100 to 100 based on a compilation of negative and positive scores from consumers surveyed, fell from 9 in the first two months of 2014 to -33 before climbing up to -26; a score of zero means a 50/50 balance of negative and positive scores. Chevrolet, however, was at 19 before the recall took the division to -2 last week. The Bow Tie is holding at zero currently.

Though brand perception of GM and Chevrolet may be on the rebound, GM’s bottom line has yet to follow. Bloomberg reports Q1 2014 earnings may include a loss when CEO Mary Barra makes her earnings call Thursday. Compared to last year’s Q1 net profit of $1.18 billion, the automaker forecasts a loss of $1.3 billion from recalls affecting 7 million vehicles, as well as $400 million pretax charge due to Venezuela’s currency struggles, restructuring costs in Asia and South America, and losses from Europe. GM was projected to hit a record $10 billion in net profit for 2014, but analysts have now pegged profits for FY 2014 at $5.54 billion, far below the peak of $9.19 billion set in 2011.

Join the conversation
4 of 15 comments
  • CJinSD CJinSD on Apr 24, 2014

    Part of GM's financial trauma this month stems from their involvement in Venezuela? So glad we bailed them out.

    • See 1 previous
    • Lorenzo Lorenzo on Apr 25, 2014

      @wmba Wait for the other shoe - Argentina - to drop. Venezuela is staggering through the end stages of the charismatic strongman form of government - a system that doesn't last much longer than the founder, and tends to end violently. Argentina - where to begin? Will they go through IMF bailout #27, or another military takeover, or another charismatic strongman? In both countries, automakers have been, and are, taking big risks.

  • ZoomZoom ZoomZoom on Apr 25, 2014

    These recalls can be death by a thousand cuts; not unlike penalties, which can lose you the game if you're not careful. And can set officials and fans alike against you in the future. They sure aren't making me feel all warm and fuzzy, even though I saw a great looking GM car at lunchtime today.

  • Zerofoo "Hyundais just got better and better during the 1990s, though, and memories of those shoddy Excels faded."Never. A friend had an early 90s Hyundai Excel as his college beater. One day he decided that the last tank of gas he bought was worth more than the car. He drove it to empty and then he and his fraternity brothers pushed it into the woods and left it there.
  • Kwik_Shift There are no new Renegades for sale within my geographic circle of up to 85 kms. Looks like the artificial shortage game. They bring one in, 10 buyers line up for it, $10,000 over MSRP. Yeah. Like with a lot of new cars.
  • Ribbedroof In Oklahoma, no less!
  • Ribbedroof Have one in the shop for minor front collision repairs right now,I've seen more of these in the comments than in the 30 years I've been in collision repair.
  • Tassos And all 3 were ordered by Fisker's mother. Seriously, given Fisker's terrible record of Failure in the past, only an utter loser, (for example, VGhost or Art Vandelay?), looking for a BEV terrible enough to be a proper replacement of his 11 mile range Fiat 500E, would order one of these. (apart from Fisker's mother)