This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.bbc.co.uk/news/28464442
The article has changed 3 times. There is an RSS feed of changes available.
| Version 1 | Version 2 |
|---|---|
| GM profits hit by recall problems | GM profits hit by recall problems |
| (about 3 hours later) | |
| Earnings at the carmaker General Motors (GM) have slumped because of costs related to its vehicle recalls. | Earnings at the carmaker General Motors (GM) have slumped because of costs related to its vehicle recalls. |
| Second-quarter net profits fell 85% from a year ago, to $190m (£112m), the company said. | Second-quarter net profits fell 85% from a year ago, to $190m (£112m), the company said. |
| The carmaker has recalled nearly 29 million vehicles this year, mostly due to faulty ignition switches. | The carmaker has recalled nearly 29 million vehicles this year, mostly due to faulty ignition switches. |
| The cost of recall-related repairs came to $1.2bn, with another $400m put aside for compensation payments. The shares fell 4% in afternoon trade. | |
| However, the company said that this was an uncertain estimate. | However, the company said that this was an uncertain estimate. |
| "There is no cap on this program, but this charge is the company's best estimate of the amounts that may be paid to claimants," GM said in a statement. | "There is no cap on this program, but this charge is the company's best estimate of the amounts that may be paid to claimants," GM said in a statement. |
| "Due to the unique nature of the program, this estimate contains significant uncertainty and it is possible the total cost could increase by approximately $200m," the statement continued. | "Due to the unique nature of the program, this estimate contains significant uncertainty and it is possible the total cost could increase by approximately $200m," the statement continued. |
| "At the end of the day, the ultimate cost of this will be determined by Ken Feinberg [the compensation expert administering the fund],'' GM chief financial officer Chuck Stevens said. | |
| The defective ignition switch has been linked to 13 deaths so far. | The defective ignition switch has been linked to 13 deaths so far. |
| GM also said it was changing the way it would estimate future recall expenses, a move which involves putting aside a certain amount of money from the sale price of each vehicle. | GM also said it was changing the way it would estimate future recall expenses, a move which involves putting aside a certain amount of money from the sale price of each vehicle. |
| As a result the company has put aside another $900m as a best estimate of "future possible recalls for up to the next 10 years on 30 million GM vehicles on the road today". | As a result the company has put aside another $900m as a best estimate of "future possible recalls for up to the next 10 years on 30 million GM vehicles on the road today". |
| Mr Stevens also said the situation in Ukraine had led to GM cutting production there by 20-25% at its plant in St Petersburg, and that he expects more of the same in the second half. | Mr Stevens also said the situation in Ukraine had led to GM cutting production there by 20-25% at its plant in St Petersburg, and that he expects more of the same in the second half. |
| Those costs aside, GM expects to be profitable in Europe by about 2015. | Those costs aside, GM expects to be profitable in Europe by about 2015. |