GM Profits Tumble After Massive Recall Costs

The world's second-largest carmaker, General Motors of the US, has reported a drastic plunge in first-quarter earnings. The company said the sobering result was mainly due to high recall costs and restructuring.



General Motors announced Thursday its first-quarter profit fell by a staggering 86 percent. The company booked net earnings of $108 million (78 million euros) in the first three months of the year.



The bottom-line result marked the worst quarterly performance since GM posted a net loss shortly after leaving bankruptcy in 2009.



The Detroit-based carmaker said it took a $1.3-billion hit for having to recall a total of some seven million vehicles worldwide over technical issues in the ignition system of various models.



Opel soon profitable again?



However, CEO Mary Barra insisted that the firm's core business had gone well, with Q1 turnover rising slightly to $37.4 billion.



General Motors added it had incurred $300 million in restructuring costs, mostly in Europe. It said $200 million of it alone were caused by measures surrounding the end-of-year closure of an Opel plant in Bochum, Germany.



GM\'s struggling European subsidiary was reported to be on its way out of being a financial burden on the parent company.



"We're doing better than we'd expected at the beginning of the year," Opel chief Karl-Thomas Neumann commented Thursday. "We've increased our earnings and have sold more vehicles in a very demanding market environment."



hg/rc (Reuters, AP, dpa)