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GM sales, used-car values hold up through recalls

Published on NewsOK Modified: June 17, 2014 at 1:11 pm •  Published: June 17, 2014
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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," says Ricky Beggs, a senior vice president of Black Book, which also monitors used car prices.

The GM headlines keep coming. On Monday, GM recalled older large cars for an ignition problem, although GM says the cause in this one is the key design. On June 6 the company said 15 people had been dismissed in relation to the findings of its internal investigation into the small-car switch problem. CEO Mary Barra has repeatedly apologized for the injuries and loss of life. She makes a return trip to testify on Capitol Hill Wednesday.

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 says.

Consumers seemed more sensitive in the past. In the early 2000s, Firestone recalled more than 6 million defective tires on Ford SUVs, and the automaker replaced another 10 million. At least 271 people were reported killed and hundreds injured. Ford's share of the SUV market fell 5 percentage points.

One important difference is that the recalled GM small cars — the Cobalt, Saturn Ion and Sky, Pontiac G5 and Solstice, and Chevy HHR — are no longer made. And GM's newer cars score much higher in quality surveys. Also, people don't always associate General Motors with the Chevrolet, Buick, GMC and Lincoln brands, said Dominique.

Still, there is fallout.

Elise Palazzi of Hawthorne, N.J., near New York City, is still trying to sell a 2005 Cobalt that one of her daughters used to drive.

She first put the car on the market for $4,500 just before the recalls began. Palazzi told potential buyers that she had no problems with the ignition, but they were skittish, she says.

About a month ago, her local Chevrolet dealer replaced the switch. She didn't change the price, but revised her ad to show the switch has been repaired. Now she's optimistic about selling. But a man came to see the car last week and didn't buy it.

Kaufman, the Long Island dealer, is concerned about the large number of GM vehicles subject to recalls.

The federal government says there are no regulations preventing used car lots or individuals from selling recalled cars before they are fixed. But Kaufman says he won't sell any until repairs are done.

"You have a white elephant that you've just got to stick in the back of your lot and watch it depreciate," Kaufman said.