GM pays the price for car recall

General Motors reported a $1.3 billion drop in profits as it had to cover the costs of recalling a huge number of cars due to faulty ignition switches.

Dozens of accidents have been linked to the defective ignition switches that caused the engine to turn off and disabled airbags.

The company also paid a $300 million restructuring price for mostly European offices.

The immediate outcome is that the company’s net income was only $125 million, as compared to the $865 million it reported in the same period last year.

However, sales for GM went up to $37.4 billion from $36.9 billion in 2013.

Chief financial officer, Chuck Stevens, ‘obviously, the recall campaign charges in the first quarter overshadows the headline results, but if you look underneath that, we had strong performance across the board.’

The first quarter of 2014 represents GM’s worst performance since leaving bankruptcy protection in 2009.