General Motors to Pay Out $400m to Victims' Compensation Fund

Automaker General Motors (GM) has estimated it must pay $400m to a victims' compensation fund after a faulty ignition switch in several of its vehicles was linked to the deaths of at least 13 people.

In its latest quarterly report, the troubled car manufacturer said the expected cost of establishing a compensation fund for the affected victims and their families was $400m (£235m, €297m).

But because of the sensitive nature of the subject, this could rise by up to $200m, said the company.

"There is no cap on this programme but this charge is the company's best estimate of the amounts that may be paid to claimants," read a statement from the Detroit based firm.

"Due to the unique nature of the programme, this estimate contains significant uncertainty and it is possible the total cost could increase by approximately [$200m]."

GM's latest financial results show its net income fell drastically in the year to $190m – compared with $1.2bn from the same quarter 12 months ago.

This was partly down to the compensation fund but its income was largely reduced by the $1.2bn cost of recall-related issues.

The automaker has already had to recall more than 29 million cars this year, more than three times the amount of vehicles it sold in 2013.

Following the latest round of recalls and the release of its financial results, GM's stocks dropped to a lowly $37.41 in early morning trading – down by 0.9%.