If you were wondering how much the massive ignition recall cost GM so far, the answer is about $1.3 billion (€0.94 billion). More specifically, GM has spent $700 million on replacement switches and cylinders and $600 million on other recall items.
Of course, the spending has affected the company’s first quarter results, as GM today posted a profit of $213 million before dividends, compared with $1.18 billion a year earlier. This is the worst quarterly performance since the company emerged from bankruptcy.
GM said first-quarter results fell 82 percent but far exceeded Wall Street expectations, as the push to sell cars and trucks at higher prices in North America helped the automaker offset recall costs.
The refusal by GM’s executives to bend on pricing in the U.S. pushed the average vehicle sales price across the entire vehicle portfolio to $32,794, up $2,000 over last year. Revenue rose to $37.4 billion from $36.9 billion. Pickup trucks sold for $5,000 more than they did a year earlier, as much of those sales were high-end trucks.
GM chief financial officer Chuck Stevens said it is too early to tell if the company will spend more money on the recall this year. “The charges we have taken in the first quarter are based on what we know today. As issues come up we will deal with them aggressively. It’s hard to predict and too early to tell,” Stevens said according to The Wall Street Journal.
On Wednesday, GM said it shipped thousands of kits consisting of ignition switches, ignition cylinders and key sets for older model small cars subject to a safety recall. About 1.4 million owners of 2003-2007 models were mailed letters telling them to contact a GM dealer to make an appointment for repairs, which should take about 90 minutes.
GM added that owners of 2008-2011 models subject to the recall will receive a letter in early May confirming their inclusion in the recall. Another letter alerting them when parts are available will follow.
By Dan Mihalascu
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