Recalls Hammer GM Brand, Q1 2014 Profits

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Saturn Ion Red Line 2007

autoblog reports that the first thousand kits intended to repair a handful of General Motors vehicles affected by the February 2014 ignition switch recall have been shipped to dealers. In addition, 1.4 million recall letters were sent to affected consumers for 2003-2007 vehicles; Affected owners from 2008 to 2011 will receive their letters in the coming weeks. The letters tell consumers to schedule the repair with their dealer, which GM says will take 90 minutes. Until the repair occurs, the automaker asks all consumers to have nothing but the key before inserting it, and to make sure their transmissions and switches are in place before removing the key.

In other recall news, Bloomberg says plaintiffs seeking to remove liability protections put in place when GM emerged from bankruptcy in 2009, based on bankruptcy fraud by omitting information about the off-spec ignition switch at the heart of the ongoing crisis, could find difficult fight at best. Bankruptcy attorneys said Bloomberg that they could seek pretrial evidence from GM to prove their case, but differ that the statute of limitations is a factor in moving the lawsuit forward. Meanwhile, the automaker has asked Judge Robert Gerber, who ruled in the 2009 case, to strengthen the liability shield before further trials can move forward. A conference call with Gerber and GM is scheduled for May 2 in Manhattan.

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As for how GM has been dealing with the recall crisis since it began, Detroit Free Press claims the automaker’s brand suffered more damage than Chevrolet in the first few weeks of the recall, according to YouGov’s BrandIndex Buzz consumer survey. The automaker’s score, determined on a scale of -100 to 100 based on a compilation of positive and negative scores from surveyed consumers, fell from 9 in the first two months of 2014 to -33 before rising to -26; a score of zero means a 50/50 balance of negative and positive scores. Chevrolet, however, was at 19 before the recall brought the split to -2 last week. The bow tie currently has zero.

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While GM and Chevrolet’s brand perception may be picking up, GM’s bottom line has yet to follow suit. Bloomberg reports that first-quarter 2014 earnings could include a loss when CEO Mary Barra makes her earnings call on Thursday. Compared to last year’s first quarter net profit of $1.18 billion, the automaker expects a loss of $1.3 billion from recalls affecting 7 million vehicles, as well as a $400 million pre-tax charge due to currency difficulties in Venezuela, restructuring costs in Asia and South America and losses in Europe. GM was expected to post a record net profit of $10 billion in 2014, but analysts have now pegged profit for fiscal 2014 at $5.54 billion, well below the high of $9.19 billion set in 2011.


Source : thetruthaboutcars.com

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