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GM recalls not hurting sales, local dealers say

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Jim Leute
July 19, 2014

JANESVILLE—Waves of General Motors' recalls have created more work in the service and parts departments at local dealerships, but they haven't significantly hurt sales, officials at the businesses said.

Local activity since the start of the year mirrors a national mystery: How can an automaker that has recalled nearly 26 million vehicles in the first six months of the year continue to have such strong sales?

Local auto sales, particularly by brand, are difficult to track.

One of the best indicators, however, is the number of new vehicles registered in each county.

Through June, there were 3,608 new cars and trucks sold and registered in Rock County.

That's less than 1 percent behind the 3,641 vehicles registered in the first six months of 2013.

“Our sales are good, but we're off slightly for the first half of the year,” said Bob Clapper, an owner and general manager at Fagan Automotive in Janesville.

“But we had a big first half last year.”

The dealership's sales since March 1 have been fine, he said, noting that frigid January and February weather kept customers away from dealers' lots.

Some industry observers speculate consumers have become numb to the onslaught of recalls over the last several years that have touched nearly every manufacturer.

Now it's GM's turn, but the automaker still posted its best June sales in the U.S. since 2007.

Some of those same observers suggest GM's sales haven't taken a big hit because consumers are crediting the automaker for admitting its mistakes and taking the steps to correct them.

It's bolstered brand loyalty, they assert.

Clapper doesn't necessarily buy that. He's not sure car buyers have thought that deeply about the issue.

“The majority of people look at it as no big deal,” he said. “Recalls are not new, although the extent of this certainly is.

“Most people are just happy to get the problem fixed.”

Clapper said GM's sales are up slightly on a national basis.

In Wisconsin, sales of GM vehicles are down about 6 percent, as are Fagan's, he said.

“I'm not sure how much of it is the recalls,” he said. “Some of it certainly is.”

Scott Weiser, owner of Bud Weiser Motors in Beloit, agrees.

“We haven't really seen anything to suggest that the recalls have had a significant impact on sales,” he said. “Of course, if people are staying away because of the recalls, we wouldn't necessarily know that.”

SERVICE SIDE

One thing Clapper knows for sure is that his sales team has sold cars that it hasn't been able to deliver.

“Getting parts has been the biggest problem,” he said. “At any given time, we might have 20 percent to 25 percent of our inventory that we can't sell.

“GM decided there was a problem but then didn't spit out the parts to get these things done in a timely fashion.”

Added Weiser: “I'd like to see that GM makes sure its gets its logistics lined up when they do announce these. In some cases, the parts haven't been in the system. Some key databases aren't touching, and that's been frustrating.”

Clapper said in some cases the parts were delayed up to three months.

Many involved ignition switches.

At one point, Fagan had 75 loaner vehicles out.

“That was certainly a boon for Enterprise,” Clapper said. “In some of the cases involving the older Cobalts, the customers didn't mind because they were riding around in a newer vehicle.”

GM pays for the rented loaners.

It also pays dealerships for the recall work.

The automaker recently said it would increase its second-quarter charges to pay for recalls to $1.2 billion, up from the previous announced $700 million.

“It's certainly created a lot of extra work in the service department, but it's also stopped sales on some cars because we have to get them fixed before we can deliver them,” Clapper said.

The recall work has increased dealership revenues, but it hasn't been completely free of cost.

“Our service department is always busy,” he said. “The department revolves around how many hours you have. If you have 20 techs who each work eight hours, that's 160 hours a day.

“If they're doing recalls, they aren't doing something else.”

Weiser said his Beloit service department is busy, too.

“People seem to be patient with the recalls once we get a chance to explain it to them and the time it takes to get the parts,” he said. “There just doesn't seem to be too much concern about it.

“It does give the opportunity for people to see our service department that we don't normally see every time. They can see that we are a competitive shop and see all the services we offer.”

Both Weiser and Clapper said the recall work can cut into their dealerships' bottom lines when people the parts departments are forced to spend a lot of time re-coding lock cylinders or packing defective parts for return to their manufacturers.

Still, Clapper said he senses that GM is doing the best it can to correct its problems.

“I think GM is really going over the top on it, and I don't think they'll be the only one,” he said. “It's entirely possible the manufacturer of that ignition switch sold to other car makers.

“Like past recalls, this will blow over, but it certainly is front and center right now.”



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