GM incentives helped offset effect of recalls on April 2014 sales

Article by Christian A., on May 5, 2014

UPDATE: It appears that things are working quite well for General Motors as company's Senior Manager, Sales & Communications James R. Cain has just told us in an email that the incentives offered to recall customers did not have a major impact on their sales in April 2014.

An aggressive subsidy campaign by General Motors to appease owners of vehicle models covered by the current faulty ignition switch recall might have helped the carmaker win a 7-percent jump in sales in April. Since early March this year, GM has been offering affected owners $500 for the purchase of a certified pre-owned vehicle.

Then, the carmaker made the deal sweeter by making the owners eligible for employee pricing on a new vehicle. Those bonuses are on top of incentives for which the customer qualifies.

GM chief executive Mary Barra remarked during a conference call with analysts to discuss first-quarter results that the dealership traffic brought by the 12 recalls the carmakers issued in the first quarter is a “huge opportunity.

Jake Moore, general manager of Country Chevrolet in Warrenton, Va. Told Automotive News that the while most of the vehicles in the recall were older ones, it doesn’t necessarily mean that their owners are used-car buyers. He noted that he two Chevrolet Malibus, two Cruzes and one Spark last month to customers who traded in recalled 2005, 2006 and 2010 Chevy Cobalts.

He remarked his dealership sold four of the trade-ins for wholesale since they had over 100,000 miles. He said that they are keeping the 2010 Cobalt, waiting for the fix to come.

According to a research note of Morgan Stanley analyst Adam Jonas, “incremental showroom traffic” could boost GM sales over the next six months as dealers try to fix the recalled vehicles. He said that if dealers could convert 2 percent of owners of recalled vehicles into new-car buyers, GM’s market share in the US could rise by more than 1 percentage point.

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