Will recall woes start crimping GM's sales?

DETROIT - As General Motors (GM) executives show off their newest cars and trucks at the New York International Auto Show this week, analysts are watching for signs that consumers are shying away from the ones sitting on dealer lots.

Many expect GM sales to take a hit from a mishandled recall of small cars, though it's unclear when and how severe. Any decline would hurt the automaker's market share and potentially its credit rating. Concerned investors have sent GM stock to a 10-month low.

Data collected from dealers by J.D. Power and Associates show GM U.S. sales fell 6.3 percent in the first five days of April compared with a year ago, while the overall market dropped just 0.3 percent. The same data show an even larger decline for Ford (F). April is expected to be a rebound month in the U.S. after a rough winter, and analysts expect sales to pick up in the month's second half.

Historically, big, highly publicized safety problems eventually affect sales, said Jesse Toprak, chief analyst for the car-buying site Cars.com. GM's sales weren't hurt in February or March, but data from April is starting to show weakness, Toprak said.

He said buyers trying to decide between a GM brand car and a rival "might just take GM from their consideration list, thinking that it's not worth it."

Jeff Schuster, senior vice president of sales forecasting for LMC Automotive, an industry consulting firm, expects GM sales to show a gain this month, but only about half the 8 percent increase he forecasts for the industry overall. The recall might have an impact, but GM has also been struggling to match Ford and Chrysler in pickup sales, he said.

Schuster doesn't think GM's market share will plunge as much as Toyota's did in 2010, when it recalled millions of cars because of unintended acceleration. The difference: GM no longer makes most of the cars it's recalling. In 2010, Toyota (TM) was recalling cars currently on sale.

In the second half of that year, Toyota sales fell more than 8 percent. For the full year, Toyota's share of the U.S. market dropped 1.5 percentage points, according to Autodata Corp.

So far this year, GM's sales are down 2 percent, but its car sales have outperformed the market, rising 3.4 percent through March. And they could be helped later this year by models being introduced at the New York auto show. GM will display a freshened Chevrolet Cruze compact for 2015, a high-performance Corvette convertible and a new small SUV that gives Chevy an entry in one of the hottest-selling market segments.

A sales decline or increased use of discounts could have broader repercussions for GM. The Standard & Poor's ratings agency last week said the recalls could prevent GM's credit rating from returning to investment grade for the first time since 2005. The agency warned that it is watching for "any significant deterioration" in GM sales. GM's U.S. market share in March was 16.7 percent, down 0.2 percentage points from a year ago.

Ford, GM's chief U.S. rival, is also off to a slow start in April, according to the J.D. Power data, with sales down 10 percent for the first five days.

Buckingham Research analyst Joseph Amaturo said this confirms his view that Ford will lose market share due to a lack of new models. Through March, Ford's car sales were down 7 percent, while truck sales were off 0.4 percent. He expects GM sales to improve through the month.

Several GM dealers say their sales haven't been hurt by the recalls, with some reporting better months than last year thus far.

"I haven't noticed any impact on sales at all," said Anthony Augelli, owner of a Buick-GMC dealer in Gurnee, Ill., north of Chicago.

GM CEO Mary Barra, in a speech ahead of the New York auto show, said the company's retail sales to individual buyers were up 7 percent last month, higher than the rest of the industry. In addition, GM's average sale price set a record at $34,000, up about $2,000 from February and more than $3,800 from last year, she said.

Joe Hinrichs, Ford's president of the Americas, said Tuesday that sales were so strong at the end of March, it caused a slowdown at the start of April. The rest of the month should be stronger, he said.

GM shares rose 81 cents on Tuesday, or 2.5 percent, to close at $33.36. They are down 6 percent since the string of recalls started on Feb. 13.