General Motors keeps up sales growth despite recall issues
Despite a torrent of negative news about General Motors recalls, the company is keeping up its sales growth. The automaker's April sales rose 6.9 percent over a year earlier as consumers seemed to shrug off continuing headlines about government investigations into GM's handling of the recalls.
Just last week, GM announced that its first-quarter profits were down 86 percent from a year earlier, chiefly because of $1.3 billion it set aside for the cost of repairing the seven million vehicles covered under various recalls. But today's report showed the company followed its March sales gains with continued growth in April.
"GM is showing no signs of an impact related to the recall as evidenced by its seven percent increase in overall sales volume in April, including an eight percent gain in retail sales," says senior analyst Alec Gutierrez of Kelley Blue Book. GM said sales to fleets rose five percent.
In another indicator that the recall news was not keeping car shoppers from considering GM brands, Edmunds.com analyzed how many of those considering a new car on its web site looked at GM brands. At the height of the recall news in March, for instance, shoppers considering Chevrolet dropped just about one percentage point -- from 9.6 percent to 8.3. In contrast, during Toyota's sudden acceleration recall issue in 2010, consideration of Toyotas fell by nearly 3.5 percentage points from its previous high.
The recall news also has not affected the value of GM's used cars, according to Larry Dominique, president of ALG -- a firm that estimates the future value of used cars for leases. The recall effect on consumers may have been lessened because the models involved -- and two of the car brands -- are no longer in the current GM offerings. "When you talk about Saturn or Pontiac or Chevrolet models no longer in the current lineup, people tend to think of it as being in the past," Dominique told MoneyWatch.
In its April report, GM said that sales of the mid-size Chevrolet Impala rose 27 percent over a year earlier; the small urban model Chevrolet Spark rose 24 percent. For the Cadillac luxury division, total sales were the best for April since 2007. The company added that combined results for its large SUVs -- Chevrolet Tahoe and Suburban and GMC Yukon -- were up 22 percent.
GM's overall 6.9 percent sales increase trailed the 14 percent gain for Detroit rival Chrysler Group. But Ford, which announced today that Mark Fields will succeed Alan Mulally as CEO, reported a drop of one percent in April sales compared with a year earlier.
When all companies have reported later today, analysts expect that overall industry sales will show an increase of eight to 10 percent over a year earlier. Though its sales are up, analysts expect GM's market share to contract slightly by about eight-tenths of a percentage point.
ALG's Larry Dominique takes it as a healthy sign for the industry that fleet sales -- those vehicles sold to car rental agencies and corporate fleets -- have been a decreasing share of overall sales. "That shows consumers are still ready to buy," he says.
