Dealers could boost service revenues over GM recalls

Article by Andrew Christian, on May 27, 2014

The huge number of vehicles that General Motors has so far recalled for safety issues seemed like a bad news for dealers. So far this year, GM has recalled 13.8 million vehicles in the United States, although some vehicles were counted more than once due to multiple issues. The recalls covered 2.6 million Chevrolet Cobalts, Saturn Ions and other small cars for faulty ignition switches tied to 13 deaths.

On the other side, such recalls could mean a thriving business opportunity for dealers too. After all, a large chunk of $1.7 billion that GM has allocated so far to cover the cost of 30 recalls would be for repair work and reimbursement for loaner vehicles at dealerships.

Likewise, service advisers will have the opportunity to sell other parts or components to vehicle owners whose units are up for recall repairs. Richard Gonzales, service director at Vera Motors in Pembroke Pines, Fla., told Automotive News that there is no question that dealers will have a “big upsell opportunity” when recalled vehicles come to their shops.

Despite the opportunity, the barrage of recalls represents unpleasant news for dealers. After all, the huge number of recalled vehicles means that a large amount of parts needed to fix them.

So far, dealers are experiencing delayed repair parts and cramped lots as they have been compelled to stop sales of several key models.

Cort Johnson, service manager for Larry H. Miller Chevrolet in Murray, Utah, remarked that he is worried that negative effect of the recalls on vehicle sales would also lead to lesser service revenues at his dealership “two years from now.” [source: automotive news - sub. required]

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