Recall costs chopped $1.5 billion from General Motors’ bottom line in the second quarter, cutting its net income by 85 percent.
The automaker, which is in the midst of the worst recall crisis in its history, posted a net profit of $190 million, or 11 cents per share. A year ago GM made $1.26 billion, or 75 cents per share. Without one-time items GM would have made 58 cents per share, equaling Wall Street’s expectations.
So far this year GM has recalled almost 30 million vehicles, surpassing the company’s annual record.
GM took two pretax charges tied to the recalls: $400 million to compensate victims of ignition-switch related crashes and $874 million to account for recall expenses during the next 10 years. It also booked $1.2 billion in expenses for recalls announced during the quarter. The after-tax impact of those items was $1.5 billion.[ap]