Despite recall, GM dealers get new business, customers

Jul 26 2014, 00:00 IST
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SummaryThe news about deadly crashes linked to a faulty ignition switch, followed by wave upon wave of recalls, did not bode well for General Motors dealers earlier this year.

The news about deadly crashes linked to a faulty ignition switch, followed by wave upon wave of recalls, did not bode well for General Motors dealers earlier this year.

It conjured visions of worried, frustrated drivers pouring onto lots like Raymond Chevrolet, outside of Chicago.

But according to Robbie Long, service director for the dealer and nearby Ray Chevrolet, what looked like “great adversity” has turned into an opportunity.

The hundreds of customers bringing old cars into the family-owned dealerships leave in clean cars with a bucket of goodies. Some drive home a newly purchased car. And the repairs, paid for by GM, are modestly profitable, dealers say, helping to pay general expenses as well as bringing in customers who might have been lost.

“In many cases, these are customers we haven’t been seen in a long time or have never met before,” said Long. Although the script is not what the dealership would have written, GM is delivering sales and service prospects to her door.

Certainly, there are dangers if the dealer doesn’t give good service or if parts are backed up. Some cars are being called in for more than one problem, and Long says her dealers are careful to schedule only one visit per car. “People just don’t want to see us that often,” she said.

But as of early July, the two dealerships run by brothers Ray and Mark Scarpelli are humming. Ray’s sales were up 13% on the year and Mark’s were up 20%. GM as a whole posted a 2.5% increase in sales in the first half of the year, just a step behind the industry average of 4.3%.

Interviews by Reuters with dealers across the nation found similar attitudes, for GM, Chrysler and other brands, several of which have now announced multi-million car recalls.

Don Lee, president of Lee Auto Malls in Maine which has 14 new-vehicle stores, mostly Chrysler and various Japanese brands, as well as GMC, said recalls provide “an opportunity to look over the customer’s car at no cost to them”, which often leads to more repair business.

More importantly, he said, recalls lead to more sales: he estimates that 15% of new car sales at his Chrysler stores come via the service department. GM this week said it had sold 6,600 cars to customers who traded in vehicles with defective ignition switches. “Aside from the bad publicity, which is never fun, we welcome recalls,” Lee said.

The General

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