General Motors has set aside $400 million for compensation to families of those killed or injured in crashes caused by a faulty ignition switch in its small cars.

That is just part of the $1.5 billion hit it took in its second quarter related to compensation and recall costs.

GM faces recall and repair costs on 30 million cars after issuing multiple recalls this year related to the ignition switch and other safety issues that were uncovered in an internal probe by the company.

Chief financial officer Chuck Stevens said the company will probably face high recall costs for at least 10 years. In the year ago quarter, its recall costs were $100 million.

GM took a pretax charge of $874 million to account for recall expenses during the next 10 years and booked $1.2 billion in expenses for recalls announced during the quarter.

That left it with second-quarter net profit of $190 million, or 11 cents per share, compared with $1.26 billion, or 75 cents per share a year ago.

Sales improve

Revenue was up 1.3 per cent for the quarter to $39.6 billion, about $300 million below analysts' estimates. GM has benefited from a nationwide rebound in car sales this year as consumer optimism picked up. It also sold 6,600 cars at employee pricing to owners of recalled small cars such as the Chevrolet Cobalt and Saturn Ion.

GM's safety problems began earlier this year with the recall of 2.6 million small cars with faulty ignition switches that led to at least 54 crashes and 13 deaths. In testimony before U.S. Congress, CEO Mary Barra admitted various people in the company knew about the problem for more than 10 years, yet no recalls were issued until this year.

Lawmakers have estimated up to 100 people may have died in crashes related to the ignition switch and GM has hired Ken Feinberg to administer a compensation fund.

It has set no limit on the compensation amount and chief financial officer Chuck Stevens admitted it could go as high as $600 million.

Stevens said GM's core business, led by North America and China, performed well during the quarter. Without recall expenses, he said, the company would have made $2.4 billion in North America, the highest amount since January of 2010, he said.

Pretax profits were up 36 per cent at GM's international operations including China, to $315 million. However, it faced losses in South America and Europe, in part because of uncertainty over Ukraine. It has cut production 20-25 per cent at a plant in St. Petersburg, Russia, and is closing a factory in Bochum, Germany.

With files from The Associated Press