GM Earnings Plummet 80% on Recall Costs

General Motors Co.'s net earnings in the second quarter of 2014 plunged to $278 million from $1.4 billion a year earlier, dragged down by costs associated with 22 million vehicles recalled during the period.

Revenue for the quarter rose 1% to $39.6 billion. Worldwide sales were flat at 2.5 million vehicles.

Adjusted earnings before interest and taxes fell 40% to $1.4 billion. Special items were dominated by nearly $1.3 billion in recall-related costs, including at least $400 million set aside to compensate victims of 2.6 million cars equipped with faulty ignition switches. That uncapped fund could rise to $600 million, according to the company.

GM's second-quarter operating income swung from $1.8 billion in 2013 to a $500 million loss this year. Net cash from automotive operations fell to $3.6 billion from $4.5 billion.

GM's second-quarter operating income swung from $1.8 billion in 2013 to a $500 million loss this year. Net cash from automotive operations fell to $3.6 billion from $4.5 billion.

Quarterly EBIT for GM's North American operations dropped to $1.4 billion from $2.0 billion a year earlier. Losses in Europe expanded to $305 million from $144 million a year earlier. EBIT for operations in Africa, the Middle East and Asia Pacific jumped 36% to $315 million on record sales in China. EBIT for South America swung to an $81 million loss.

Retail volume in April-June climbed 6% to 930,000 units in North America, dropped 11% to 336,000 units in Europe and plunged 18% to 214,000 units in South America. Sales for Africa/Middle East/Asia Pacific gained 6% (including an 8% increase in China) to 1 million units.

GM says its share of the global auto market slipped 0.3 points year on year to 11.3% in April-June. The company lost share in Europe (-0.9 points to 6.8%), China (-0.3 points to 13.6%) and South America (-0.4 points to 16.7%). Its share of the U.S. market was unchanged at 17.9%.