Apr. 24 - General Motors CEO Mary Barra says the massive recall hasn't hurt sales of GM vehicles. But costs from the recall slammed its profit. Fred Katayama reports.
Old GM hurt the new GM. The massive recalls of millions of cars slammed General Motor's results in the latest quarter, as earnings slid 88 percent. But the automaker managed to eke out a profit and boost sales. And CEO Mary Barra said GM hasn't seen what she called a "meaningful impact" from the negative image stemming from the recalls. Boosting revenue: record sales in China where customers love Cadillacs, and increased sales in Europe where GM now expects to break even by the middle of the decade. Back home, higher prices from GM's new full-size pickup trucks like the Silverado and Sierra added to operating profits. Plus, GM held the line on incentives. Fitch Ratings managing director Stephen Brown says it could be hard for GM to maintain its pricing discipline. SOUNDBITE: STEPHEN BROWN, MANAGING DIRECTOR, FITCH RATINGS (ENGLISH) SPEAKING: "We are seeing the growth, at least here, in North America, starting to slow, and we are seeing inventories raising, and that could lead to some pricing pressure down the road." Looking ahead, GM's CFO said it's too early to predict if the company would be hit with more costs stemming from the recalls that have been linked to at least 13 deaths. GM faces investigations from regulators, Congress, and the Justice Department over why it took more than a decade to detect the faulty ignition switch that shut off the engine and disabled air bags. S&P Capital IQ analyst Efraim Levy says GM may find a way to benefit from the crisis. SOUNDBITE: EFRAIM LEVY, EQUITY ANALYST, S&P CAPITAL IQ (ENGLISH) SPEAKING: "Even now, the fact that they have the recalls going on into the dealerships, that's actually an opportunity to build relationship with the customer as well as expand the relationship. And one example I like they gave is that someone comes for a repair, they offer a friends and family or some other deal, not just to the person who needs the repair, but someone else in their family." Investors ignored the rear-view mirror, driving up the stock that has fallen nearly 16 percent this year. Brown says Barra is taking some good steps to fix the company. SOUNDBITE: STEPHEN BROWN, MANAGING DIRECTOR, FITCH RATINGS (ENGLISH) SPEAKING: "Clearly, it's accelerating some of the changes in the company. I thought it was interesting this morning, she noted on the call that this could potentially accelerate some of the cultural change within the company, and, I think, that would actually be a positive. You know, certainly, coming out of the bankruptcy, they fixed their finances, but there were a lot of deeper issues within the corporate culture that needed to be worked on, and this might be one way to get that to occur more quickly." On Thursday, investors' eyes will turn to earnings from arch rival Ford, which like GM, has been seeing brighter signs in Europe and China but headaches in South America.