General Motors Recall To Cost $1.3 Billion, Double The Earlier Estimate
April 10, 2014 by UPI - United Press International, Inc.
DETROIT (UPI) — General Motors has said that its faulty ignition switch-related recall will cost $1.3 billion, double the original estimate of $750 million.
The recall includes more than 6 million cars. The automaker has said the costs for recall-related repairs and for 15,000 rental cars they will provide customers in the interim was higher than previously estimated. GM originally estimated the costs for the quarter to be $300 million, which was then revised to $750 million.
The automaker could be facing its first loss since emerging from bankruptcy in 2009. The costs of the recall, $1.3 billion, will be added to a $400 million charge previously disclosed for Venezuelan currency fluctuations. GM in the first quarter of 2013 earned $1.18 billion.
GM has also expanded the ignition switch recall to include replacing the lock cylinder into which the key is inserted, because it could be pulled out with the engine still running.
GM said it is “aware of several hundred complaints of keys coming out of ignitions. Searches of GM and government databases found one roll-away in a parking lot that resulted in a crash and one injury claim. The same searches turned up no fatalities.”
The decision to add the lock cylinder to the recall was taken a day after GM Chief Executive Mary Barra testified before a Senate panel on Capitol Hill.
Dealers are said to be receiving the new ignition switches and will also replace the ignition lock cylinders and, if necessary, reprogram new keys.
Earlier in the day, GM said that it was suspending two engineers involved with the ignition switch recall. Ray DeGiorgio and Gary Altman were cited as playing a key role in the decision to not replace the faulty ignition switch.