clear
Thursday May 7th, 2015 5:40AM

GM sales, used-car values hold up through recalls

By The Associated Press
DETROIT (AP) -- 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.<br /> <br /> 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 either, up 13 percent in May.<br /> <br /> 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.<br /> <br /> In the past, consumers punished automakers for big recalls. Those companies lost market share - Toyota's dropped 2 percentage points over 12 months when it recalled 14 million cars for unintended acceleration. Yet GM's has held fairly steady so far, around 18 percent.<br /> <br /> GM has cautioned that an ongoing companywide safety review could produce even more recalls - just Monday it recalled another 3.4 million cars for a separate ignition switch issue - so consumers might still decide it's smarter to buy their wheels elsewhere.<br /> <br /> 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.<br /> <br /> "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.<br /> <br /> 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.<br /> <br /> 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.<br /> <br /> 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.<br /> <br /> That doesn't mean the cars won't sell. At L.A. Sales in Oyster Bay, New York, on Long Island, 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.<br /> <br /> Experts say the volume of recalls has taken away some of the fear factor.<br /> <br /> "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.<br /> <br /> 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.<br /> <br /> 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.<br /> <br /> "They can mitigate it with some targeted marketing efforts" and bigger discounts, Toprak says.<br /> <br /> 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.<br /> <br /> 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.<br /> <br /> Still, there is fallout.<br /> <br /> 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.<br /> <br /> 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.<br /> <br /> 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.<br /> <br /> Kaufman, the Long Island dealer, is concerned about the large number of GM vehicles subject to recalls.<br /> <br /> 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.<br /> <br /> "You have a white elephant that you've just got to stick in the back of your lot and watch it depreciate," Kaufman said.
© Copyright 2015 AccessNorthGa.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Judge denies motions to move, delay Tsarnaev trial
Lawyers for Boston Marathon bombing suspect Dzhokhar Tsarnaev asked a federal appeals court Wednesday to overturn a judge's decision to not move his upcoming trial out of state.
10:02PM ( 4 months ago )
High court to adopt electronic filing of cases
The Supreme Court is belatedly developing an electronic filing system similar to those used in courts around the country, Chief Justice John Roberts said Wednesday in his annual end-of-year report.
7:57PM ( 4 months ago )
Storm brings snow, cold to West for New Year's
A blustery winter storm dumped snow and ice across the West on Wednesday, making driving treacherous in the mountains from California to the Rockies and forcing residents and party-goers in some usually sun-soaked cities to bundle up for a frosty New Year's.
5:19PM ( 4 months ago )
U.S. News
State DOT awards $48M contract for NE Ga. road project
The state Department of Transportation has awarded a $47.8 million contract for nine miles of work on a northeast Georgia road.
9:37AM ( 4 months ago )
Business News
Grass fire impacts rush hour traffic on 985
Rush hour traffic on I-985 was slowed by a grass fire Wednesay afternoon with one lane closed while firefighters fought the blaze.
10:19PM ( 4 months ago )
Hall County conviction, sentencing to be reviewed by SCOGA
The State Supreme Court has agreed to hear the appeal of a Hall County man when they reconvene in January.
2:37PM ( 4 months ago )
Maysville man dies from Banks County wreck
The Georgia State Patrol reports that alcohol and/or drugs were factors a single-vehicle wreck that claimed the life of a Maysville man in Banks County Tuesday night.
11:07AM ( 4 months ago )
Local/State News
Obama again avoids calling 1915 Armenian killings 'genocide'
WASHINGTON (AP) — President Barack Obama will once again stop short of calling the 1915 massacre of Armenians a genocide, prompting anger and disappointment from those who have been pushing him to ful...
1:00PM ( 2 weeks ago )
Ex-NFL star Hernandez convicted of murder, sentenced to life
FALL RIVER, Mass. (AP) — Former New England Patriots star Aaron Hernandez was convicted of first-degree murder and sentenced to life in prison Wednesday for a deadly late-night shooting, sealing the d...
8:54PM ( 3 weeks ago )
Clinton kicks off 2016 campaign online, heads next to Iowa
WASHINGTON (AP) — Hillary Rodham Clinton jumped back into presidential politics on Sunday, making a much-awaited announcement she will again seek the White House with a promise to serve as the "champi...
7:56PM ( 3 weeks ago )
Hall, White, Jefferson schools recognized nationally for use of technology
Three school districts in northeast Georgia - Hall, White, and Jefferson - have received national recognition for their use use of innovative technologies. They earned top spots in the Center for Digital Education's and the National School Boards Association's 10th annual Digital School Districts Survey.
By Staff
1:00PM ( 3 weeks ago )
US Capitol lockdown lifted after man fatally shoots himself
WASHINGTON (AP) — A precautionary lockdown of the U.S. Capitol was lifted after about two hours Saturday following a suicide by a man carrying a protest sign.The man died after shooting himself on the...
6:15PM ( 3 weeks ago )