Latest GM Recall Woes Hurt Q2 Results
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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- Duane Baldinger Where can I send the cash? It's a surprise BDAY present for my cupcake Mailman. D Duane
- Art Vandelay Pour one out for the Motors Liquidation Corporation
- Bill Wade Norm, while true I'll leave you with this. My 2023 RAM is running Android 8 released in 2017.My wife's navigation on her GM truck is a 2021 release, I believe the latest. Android Auto seems to update very week or two. Now, which would you rather have? Anybody with a car a couple of years old NEVER sees any updates. Heck, if your TV is a few years old it's dead on updates. At least cell phones are rapidly updated. If your old phone won't update, buy another $200 phone. If your GM vehicle doesn't update do what, buy another $50,000 GM vehicle?
- Lou_BC Once again, Mustang is the last pony car standing. Camaro RIP, Challenger RIP.
- FreedMike Next up should DEFINITELY be the Cadillac Eldorado. On the subject of Caddies, I saw a Lyriq in person for the first time a couple of days ago, and I'm changing my tune on its' styling. In person, it works quite well, and the interior is very nicely executed.
@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).
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.