General Motors profit plunges 90% in Q1

WASHINGTON: General Motors Corporation has reported 90% drop in first quarter profits, drained down by the slump in its mortgage branch. Net income dropped to $62 million from $602 million in the same period last year, the Detroit automaker said Thursday. Revenues were down 16% to $43.9 billion. The overall slump in the US mortgage market has seen many borrowers overextended and unable to keep up with payments, resulting in a domino effect throughout the industry.

The increasing number of loans to high-risk lenders is coming under scrutiny by the government and consumer groups. The profit plunge came despite CEO Rick Wagoner's claim recently that his plan to end losses was working, Bloomberg financial news service reported. "The business is still about a break-even business, so we've got a lot of work to do," Wagoner was quoted as saying Thursday.

GM has wrung concessions from unions on labour and healthcare costs and is carrying out massive job layoffs, but those moves have failed to make the North American auto unit produce profits. Last month, in a long-expected development, Japanese automaker Toyota Motor Corp ousted GM as the world's largest automaker, reporting sales of a record 2.35 million vehicles for the first quarter.