GM Profits Overshadowed By Recalls, Ford Profits

After General Motors recalled almost 30 million vehicles this year worldwide, their profits are lagging and rival Ford Motor Company is pulling ahead.
Posted at 7:16 PM, Jul 24, 2014

Business woes continue for major car company GM, which has recalled almost 30 million vehicles worldwide this year.

Eighty-three percent, a number that sounds more like a department store sale than a plunge in profit for a major car company, is how much GM’s second-quarter profits fell this year compared to 2013. (Via Fortune)

In 2013 GM brought in $1.2 billion during its second quarter. This year? GM pulled in a net income of $200 million, while its rival Ford Motor Company continues to thrive, beating Wall Street’s expectations. (Via General Motors, Ford Motor Company)

GM's financial troubles are being largely attributed to it's recalls, which has cost the company $1.2 billion in repairs and $1.3 billion in "special items," such as victim compensation. (Via WXYZ)

And those numbers are only expected to rise after Wednesday when GM announced six more recalls which cover more than 700,000 vehicles world wide.

However, GM's CFO Chuck Stevens is looking at the glass half-full, pointing at the company's key markets.

“The key message: We have strong core operating performance, especially in our key markets, North America and China, … Excluding the impact of recalls, North America earnings were up 20 percent year over year.” (Via CNBC)

Surprisingly enough, some analysts are saying the recalls aren't as bad for GM's sales as you would think.

"Consumers don't really attribute the current cars that are being made by GM now with the cars that are being recalled. In the minds of many consumers those recalls have to do with older models." (Via BBC)

GM is posting a 9.2 percent profit margin in North America, it's largest market, and Fox Business reports it's executives believe the motor city company is on track to hit it's mid-decade target of 10 percent.

International Business Times points out that a 4.9 increase in sales linked to subprime lending is also helping the company but it's not necessarily good for the consumer. 

The New York Times reports more and more people are being bogged down by these subprime loans given out to people with bad credit but come with extremely high interest rates.

Outside the U.S., sales fell in Europe and South America but China has proven to be a strong market for GM with sales increasing 8.1 percent.