GM Reports Strong Earnings, Despite Ongoing Ignition Defect Claims
Friday, October 24
Despite a steadily growing death tally stemming from defective ignition switches in numerous models of its cars and SUVs, General Motors on Thursday reported higher-than-expected profits for the third quarter, beating Wall Street’s forecasts. The company credited strong North American sales for helping double its profit from the same period year-over-year, while thousands of defective vehicles remain on the road.
GM reported third quarter 2014 net income of $1.38 billion, almost twice the $698 million from the same period in 2013.
The profit surge comes amidst continued reports of fatalities and injuries caused by faulty ignition switches that can shut the vehicle’s power down, causing loss of driver control and disabling safety features such as airbags. According to the latest public report issued October 20 by independent compensation expert and attorney Kenneth Feinberg, who runs the $400 to $600 million GM compensation program for victims of crashes involving defective ignitions, 29 fatalities have been approved officially for settlement offers so far, and many claims are under review.
For the first time this year, GM did not include any financial charges involving safety issues. During the first two quarters of 2014, GM had taken special charges totaling nearly $3 billion relating to the defective ignitions and other recalls. Yesterday’s earnings release showed that the automaker did incur costs of $700 million for repairing cars and recalls during the latest quarter–a charge that had been accounted for previously.
GM has admitted it was aware of the problem with the faulty ignition switches for at least a decade. Only in February 2014 did GM finally begin recalling the dangerous cars and SUVs.
GM Issues Updated List of Recalled Vehicles
Friday, October 24
GM today updated its running list of recalls for North America in 2014. Recalls now total 75, and include vehicles with defective ignitions as well as numerous other safety issues. The 75 recalls collectively include over 26.5 million vehicles in the U.S., over 30 million worldwide, and include the approximately 2.6 million vehicles specifically recalled for ignition defects. See the updated list here.