Recalls haven't hurt GM's sales, used car values
DETROIT — Consumers looking for a used vehicle aren't shying away from GM models — even though more than 20 million GM cars and trucks have been recalled this year.
General Motors cars such as the Chevrolet Malibu have retained or increased in value, sometimes more than rival vehicles. And sales of new cars aren't slowing, up 13 percent in May.
GM has issued 44 recalls in North America this year for parts ranging from ignition switches to air bags. The most serious is for ignition switches in 2.6 million small cars linked to more than 50 crashes and at least 13 deaths. Investigations into that recall have exposed GM as a company that was too slow to react to serious safety issues.
In the past, consumers punished automakers for big recalls. Those companies lost market share — Toyota's dropped 2 percentage points over 12 months as it recalled 14 million cars for unintended acceleration. Yet GM's has held fairly steady so far, about 18 percent.
GM has cautioned that an ongoing companywide safety review could produce even more recalls — on Monday it recalled 3.4 million more cars for a separate ignition switch issue — so consumers might still decide it's smarter to buy their wheels elsewhere.
But for now, experts say, GM has retained buyers' confidence by appearing to act quickly on safety matters — even though GM's internal investigation into the small-car switch recall showed that employees took years to realize they had a safety problem on their hands.
“People are associating that with being vigilant more than being careless,” said Larry Dominique, president of ALG, formerly Automotive Lease Guide, whose data is used by dealers to set values of leased cars.
That could explain why the value of the 2010 Chevrolet Malibu rose almost 3 percent from February, when the recalls started, through May, according to ALG. That compares with midsize cars as a whole, which dropped in value by 1 percent. The Malibu has been part of five recalls this year.
The value of most other used GM cars also rose. The exception: the Chevrolet Cobalt, which is at the heart of the first ignition switch recall. About 1 million Cobalts are being recalled. Of the 13 deaths GM counts, nine occurred in Cobalts.
ALG says the value of 2010 Cobalts dropped 2.4 percent from February through May, but the compact car segment's value rose almost 3 percent. Falling values have triggered lawsuits from Cobalt owners.
That doesn't mean the cars won't sell. At L.A. Sales in Oyster Bay, N.Y., part-owner Andy Kaufman recently sold a 2005 Cobalt for just under the $5,000 he was asking. The buyer, he says, had no concerns once Kaufman showed him the switch had been replaced.
Experts say the volume of recalls has taken away some of the fear factor.
“I'm beginning to wonder if the consumer is almost numb to the next headline that comes out,” said Ricky Beggs, a senior vice president of Black Book, which monitors used-car prices.
Even if consumers do become sensitive to the recalls, any new-car market share decline would be small, predicts Jesse Toprak, senior analyst with the Cars.com website.
“They can mitigate it with some targeted marketing efforts” and bigger discounts, Toprak said.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Reliable family car feels upscale
- Stocks snap 4-day losing streak; corporate earnings concerns linger
- Pittsburgh angles to keep Heinz headquarters in merger
- Stop foreign dumping, U.S. Steel CEO Longhi tells Congress
- Heinz merging with Kraft in mega-deal; headquarters to stay in Pittsburgh
- Michigan man takes Heinz to court over Dip & Squeeze ketchup packet
- Pa. Gas & Electric agrees to $6.8 million settlement of polar vortex claims
- One secret Facebook doesn’t want you to know
- Federal Trade Commission cracks down on crooked vehicle sales
- Loss of Costco staggers credit card giant
- American Eagle Outfitters to add stores in Chile, Peru