I don't think Wall Street had fully realized the dependence of GM's and Ford's North American earnings on a few light-truck models. That was the nasty surprise that drove their shares down.
The business does not deserve a huge premium. It's a cyclical business, earnings are erratic.
My thought is that this will not be a major stock market or earnings event. As recalls go, it's a lot of vehicles, but companies always make a provision for this sort of thing.
You have an earnings penalty and a cash benefit, neither of which is overwhelming.
I think the effect has already been felt on Ford's earnings because Ford and the other automakers book themselves in profits when they produce and ship the cars to the dealers,
In an environment where nobody's earning raises, if they turn the company around, they get rewarded.
I think they're pretty smart to take the earnings hit now,
The accounting charges seem to be mostly timing -- instead of earning in one period they have to state them in another period.