General Motors' recall crisis virtually wiped out its profit for the first three months of the year, as it said Thursday that the cost of repairing millions of vehicles would come to $1.3 billion.
The cost of the recall and
some other accounting charges left the company with a profit of only $108
million in the quarter.
The company recalled a total of 7 million vehicles during the
quarter, most prominently 2.6 million with a faulty
ignition switch tied to at
least 13
deaths. GM said it would spend about $700 million to fix that ignition
switch, and another $600 million on other recalls.
While
most of those repairs did not start until this month, the company booked the
full cost of the recalls in the first quarter.
Still,
the nation's largest automaker will be able to afford the massive recall cost.
The earnings, excluding the special charges, were better than expected by Wall
Street analysts.
"It's
an understatement to say the first quarter was challenging for General
Motors," said GM CEO Mary Barra on a call with investors.
"Nonetheless the company remained profitable and I'm very proud of the way
the team has kept it's focus on the customers."
Shares
of GM are down nearly 16% so far
this year, but they rose more than 2% in morning trading after the earnings
report.
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