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VOL. 38 | NO. 32 | Friday, August 08, 2014
GM’s sales strong despite woes
The Associated Press
General Motors has recalled nearly 30 million cars and trucks this year, including some models that had barely rolled off the assembly line. Yet sales have been resilient, up 3.5 percent through the first seven months of the year.
In mid-June, however, the automaker was headed for a year-over-year monthly sales decline, according to data compiled by automotive research firms. Then, on June 20, GM asked dealers to buy more cars, and it threw in another $1,000 in discounts per vehicle, five dealership representatives told The Associated Press. The company finished the month with a 1 percent gain.
The dealers said they were asked to buy the cars for a rental program, one that provides loaner cars for people whose vehicles are being serviced. When they buy the cars for the program, GM counts them as a retail sale. It’s a longstanding practice used by nearly all automakers to boost sales results.
At GM, though, the incentive was unusually generous and came as GM executives try to steer the company through the worst safety crisis in its history, including the recall of 2.6 million small cars with defective ignition switches tied to at least 13 deaths. The company has allayed investor fears by saying that recalls have actually helped sales by bringing in customers who see vastly improved new models.
“Clearly the timing seems a little suspicious,” said Jesse Toprak, senior analyst for the Cars.com website who predicted on June 22 that GM sales would be down 7 percent for the month, compared with a 2 percent decline for the rest of the industry.