Auto sales surge despite storm of recalls – Montgomery Advertiser
General Motors CEO Mary Barra assured a Congressional subcommittee last week that the company is committed to solving “underlying cultural problems” in a recall scandal.
One thing that’s not a problem for the company is its sales numbers.
Despite a storm of controversy surrounding an ignition switch problem linked to 13 deaths — as well as 38 other recalls so far this year — the company’s sales are soaring. They were up 13 percent in May, its best month since 2008.
Other automakers, meanwhile, are clearing their cupboards of safety-related issues to stay out of the sights of the National Highway Traffic Safety Administration, which is promising tougher oversight to prevent a repeat of GM’s 13-year dawdling before the ignition switch recall. The others have announced 47 recalls so far this year, covering 8.54 million U.S. vehicles, according to government records.
The trend of auto industry recalls having little effect on sales is nothing new.
Hyundai announced a major recall in April and another in July last year, and in both cases the company posted record North American sales the following month.
But this year, recalls across the industry have accelerated. GM alone is on pace to far exceed the past decade’s annual auto industry average of 21 million cars and light trucks, according to USA Today research.
With so many recalls and so little effect on sales, are people even still paying attention?
“The American consumer, since the recession, is getting pretty used to hearing bad news,” said Greg Smith, chief creative officer at advertising and marketing company VIA Agency. “With this seemingly never-ending GM recall, perhaps we are all becoming desensitized to one more story of bad news.”
Jere Beasley of the Montgomery-based Beasley Allen law firm is representing one of the victims in a crash linked to the defective ignition switch. He said it’s important for people to pay attention to the recalls but admitted it can be overwhelming.
“The truth of the matter is that the recall system is so massive, and we’re seeing so many of them that people can get desensitized,” Beasley said. “That is, until they get that call at 10:30 at night saying their daughter has been killed (in a crash).”
Another aspect that can make people tune out is that the recalled vehicle usually is no longer made. In some cases, the brand itself no longer exists.
But the danger remains.
“The millions of recalls that have been issued this year made the situation worse, and response-rates lower,” said Jack Nerad, veteran of the auto industry and executive market analyst for KBB.com. The typical consumer reaction seems to be, ‘My car’s running fine. Do I need to bother?’
“The fact is, they should bother, but getting them to grasp that is a bit like trying to push a string.”
NHTSA said about 75 percent of recalled vehicles eventually get fixed, depending on the value and age of the vehicle, how serious the problem seems and how likely the owner believes the problem will affect the vehicle.
But that 75 percent figure could be much lower with the GM ignition switch recall, which covers nine model years.
The scope of that recall and repair is “impossible,” Beasley Allen attorney Cole Portis said. “It’s just mind-boggling what needs to be done.”
While many car owners may shrug off crucial repairs or simply remain oblivious to them, the ones who do come in for service could end up contributing to a company’s sales total.
Cars.com industry analyst Jesse Toprak said good dealers can turn recalls into sales of, presumably, new cars with the latest safety features.
“You get this influx of customers waiting for their recalls to be done,” Toprak said. “If you have qualified salespeople you can turn this into a major sales opportunity.”
— USA Today contributed to this report.