Given General Motors' steady stream of recalls this year (including a single day with around 8.4 million vehicles needing repair), it's not a huge surprise that the cost to deal with all of the problems will be high. However, few analysts expected the tab to be this steep. In the General's just-announced second-quarter financial filing, it revealed that net income for the quarter was just $200 million, compared to 1.2 billion in Q2 2013 – a drop of over 80 percent. To put this in proper perspective, though, that figure is still up from the $100-million income booked from the first quarter of 2014.
The cause of the sharp descent was not only the recalls themselves, but other costs related to them, as well. According to the report, GM paid out $1.2 billion in recall-related repairs during the quarter. The company had to set aside $400 million for ignition-switch compensation, an amount it admits is an estimate that may need to be raised by an additional $200 million in the future. To prepare for possible future campaigns, the automaker also took a charge of around $900 million to be ready to pay for them.
Earnings before interest and tax also fell to $1.4 billion, compared to $2.3 billion in the same quarter of 2013. However, net revenue was up slightly to $39.6 billion, compared to $39.1 billion in the previous comparable quarter, and revenue was also up through the first six months of the year.
CEO Mary Barra put a positive spin on the tepid results, saying, "Our underlying business performance in the first half of the year was strong as we grew our revenue on improved pricing and solid new vehicle launches," she said in the company's announcement. Scroll down to read the entire release, including a table comparing Q2 2014 to 2013.