Tuesday, June 3, 2014

Chevy, cars, fleet help GM overcome recall crisis

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DETROIT -- General Motors’ U.S. sales rose 13 percent in May on a strong performance from its mainstay Chevrolet brand, a sign that consumers are looking past GM’s unfolding recall crisis.

GM dealers delivered 284,694 vehicles, the company’s best May in seven years and highest monthly total since August 2008. GM said sales to individual buyers rose 10 percent and deliveries to fleet customers jumped 21 percent, mostly because of the timing of sales to rental agencies.

GM said it likely gained U.S. market share, which would mark its first year-over-year increase in 2014. Its market share in May 2013 was 17.5 percent.

Chevrolet’s 14 percent rise was the sharpest increase of GM’s four brands. Chevy was paced by strong demand for cars, including the Cruze compact (up 41 percent to 32,393 units); Camaro sports car (up 30 percent); Impala sedan (up 23 percent); and the Spark minicar, sales of which doubled.

Buick sales rose 11 percent, and GMC sales increased 8 percent. Cadillac sales increased 6 percent, as an 18 percent jump in CTS sales were offset by weaker demand for the ATS compact (down 23 percent) and the XTS large sedan (off 19 percent).

Overall, GM’s car sales rose 20 percent. Sales of trucks, including pickups, SUVs and vans, rose 9 percent while crossover sales increased 6 percent.

GM’s sales gain came despite a slew of recall announcements during the month and lingering negative headlines from GM’s recall of 2.6 million older small cars to fix a defective ignition switch linked to at least 13 deaths. In May alone, GM announced 11 recalls covering more than 5 million U.S. vehicles.

“It shows that the recalls are not necessarily at the front of consumers’ minds,” IHS Automotive analyst Chris Hopson said.

Still, Hopson said, it’s difficult to draw conclusions from one month’s sales. “Longer-term loyalty rates will be more telling,” he said.

Some analysts have theorized that a lift in dealership traffic from customers coming through to have their cars fixed could lead to incremental sales.

“Properly executed, GM has the chance to turn a difficult situation into a new car sale,” Morgan Stanley analyst Adam Jonas said in a May 15 research note.

GM said its average transaction prices were “in line” with April, which was slightly above GM’s record $32,794 average transaction price in the first quarter. Through May, GM’s average transaction prices have risen about $2,700, GM said, amid the rollout of its pricey, redesigned pickups and SUVs.

Incentive spending as a percentage of the average transaction price declined to 10.4 percent from 10.9 percent a year earlier, GM said, citing data from J.D. Power and Associates.

GM’s May fleet sales were about 28 percent of the total, higher than GM’s target of about 25 percent. The company said May will likely be the high mark for fleet sales for the year.

GM said it expects its June fleet sales to be “down sharply” from a particularly strong month a year earlier. That will weigh on its overall sales results for the month of June.

You can reach Mike Colias at mcolias@crain.com.

http://www.autonews.com/article/20140603/RETAIL01/140609955/chevy-cars-fleet-help-gm-overcome-recall-crisis

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