Yes, again, as General Motors (GM) has announced more recalls. RBC Capital Markets’ Joseph Spak and team explain the impact:
AP This morning, General Motors announced five new safety recalls which covers ~2.7mm vehicles in the US. The company expects to take a charge of $200mm (~$0.07/share) in 2Q14 primarily for the cost of recall-related repairs from these actions. This is separate, and in addition to, the previously announced and well publicized recalls (primarily ignition switch) that resulted in a $1.3bn 1Q14 charge…
Though the charge (similar to 1Q14 $1.3bn charge) isn't recurring and thus results won't be representative of "core underlying profitability", we believe all OEMs [auto manufacturers like Ford Motor (F), General Motors and Toyota Motor (TM). ed.] should expect a more intense focus on quality and recalls (perhaps General Motors more than most). So even if a recall charge can't be considered part of the run-rate, in our view, it seems likely that warranty accruals may have to be raised negatively impacting future margins. As far as the stock, we believe General Motors was gaining some interest off of very low sentiment. This headline won't help. General Motors is perhaps even more of a 2015 story at this point (with some easier comps now as well).
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Shares of General Motors have dropped 1.5% to $34.43, while Ford Motor has fallen 0.5% to $15.66 and Toyota Motor is off 0.8% at $109.60.
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