Last month, General Motors’ website boasted that more than 264,000 vehicles had been repaired since massive recalls began in February. But what about the almost 2 million remaining in the ignition switch recall alone? As of mid-summer, GM dealers were still waiting on parts, and some were told it could be another two months before they would be shipped. So, as Jamie Marsh puts it, as far as the industry is concerned, “The full brunt of the recalls hasn’t really hit us yet.”
Marsh and his brothers, Bill Jr. and Mike, are the co-owners of Bill Marsh Auto Group in Traverse City, Mich. The team has been fielding significantly more phone calls than normal, mainly regarding the ignition switch recall on Chevrolet Cobalts and Camaros. But Marsh’s store is in a unique position: The group does not include a Chevrolet store, the brand on which much of the focus has been fixed. Marsh did own a Saturn dealership, in addition to his current Buick GMC location, and since two of the defunct manufacturer’s models — the Ion and the Sky — landed on the recall list, he expects most of his added service traffic to come from Saturn owners.
“It’s certainly going to be hundreds of vehicles that we’ll be repairing under that recall,” Marsh says. “The biggest lag for us is getting parts. We can’t just order all we want. We just get a certain number of parts shipped to us.”
The road after the initial recalls has been a rocky one, and Marsh says it started with confusion among dealers as to whether customers could or even should drive their vehicles to the store. Overall, however, he says he has been satisfied with GM’s efforts to rectify the situation in the months that followed. He describes the phase that dealers are in as “reactive,” because all they can do is assist customers who call in; he doesn’t want to reach out to his database if all he can say is, “We can’t fix your car yet and we don’t know when we can.”
Lisa Kusey-Rechsteiner is the managing partner at Graff Chevrolet in Bay City, Mich. She says her staff — specifically, the service team — has been putting in extra time, with each tech working six to 10 hours of overtime every week. But in July, only about 100 of the 300 expected recalls on Graff’s list had been completed in a service drive that typically takes in about 2,600 repairs per month.
Kusey-Rechsteiner was frustrated, to say the least, to learn about some of the recalls through the media rather than her OEM. Her dealership didn’t receive its usual four- to five-day prep period when the Camaro recall was announced. “This has probably been the most frustrating [aspect] for us, especially when we have a stop-sale on a certain vehicle but no information on why it is a stop-sale,” she says. “I know the media is pressing General Motors. In the past, I think they were waiting to hear that information, but now they’re looking for any information they can get, so that impacted us.” She adds that customers are looking to dealers for expert advice, but as a result of the short notice on the recalls, she worries the store may have failed them. “It could have been handled a little smoother, but I’d say after the initial 30 days, they got on top of it and realized where the hiccups were and helped fix it quickly.”
The Story Thus Far
GM CEO Mary Barra and her executive team have faced intense scrutiny from lawmakers and the media since at least 13 deaths were linked to a glitch that caused ignition switches to turn to “ACC” mode, disabling the airbags. GM allegedly delayed implementing a recall for 11 years, with the earliest defects appearing in the 2005 Chevy Cobalt, according to an internal report prepared for the manufacturer. Barra has twice appeared before Congress to give testimony on the events that led up to the company’s current predicament.
In mid-June, former federal prosecutor Anton Valukas issued a 325-page report detailing GM’s mishandling of the issue. Barra described the report as “extremely thorough, brutally tough and deeply troubling.” She vowed that the company would do everything in its power to make sure every vehicle was brought up to code and that GM has been working around the clock to keep dealers and customers informed. The OEM added new production lines and machinery to speed parts deliveries to dealers. Replacements have been arriving in waves, with roughly one month between each shipment. With all the gears turning smoothly, every service kit is expected to be produced by October.
GM also bulked up its staff in recent months, starting with the hiring of Jeff Boyer. He joined the team as its vehicle safety chief, according to spokeswoman Ryndee Carney. She says that, in addition to creating a dedicated website, GMIgnitionUpdate.com, the company assigned more than 20 employees to monitor social media and online enthusiast forums to answer questions from customers. Finally, 100 advisers have been specially trained to handle recall-related questions via phone and email. Carney says such queries have doubled in volume since February, sometimes spiking to three times GM’s normal rate.
The OEM’s Facebook and Twitter pages are staffed by customer service reps fielding questions from consumers, and the company hosted a live online webcast that Barra referred to as a “global town hall meeting.” According to the company, the meeting attracted the highest live viewership of any GM dealer broadcast to date. “Our dealers are doing a fantastic job of taking care of customers who are affected by recalls,” Carney says.
While dealers like Kusey-Rechsteiner became frustrated with the initial delayed updates, others, such as Scott Chauvet, sales manager at Carr Chevrolet in Portland, Ore., think GM has done more than enough. “If anything, I think they’ve probably gone a little overboard,” he says. “They’ve been more aggressive than anybody expected them to be, digging into every single car to make sure there’s nothing they missed. But we’d rather have it right than wrong.”
Recalls tend to be described as PR nightmares, but it appears to many experts that GM’s ongoing recalls will leave only a small ding in the OEM’s reputation and bottom line — especially since sales have looked particularly promising in recent months. Because all the recalled vehicles are older models, the manufacturer has crafted deals on trade-ins for customers. The strategy appears to have worked, given Edmunds.com’s latest analysis: According to the Santa Monica car-shopping site, 49 percent of people who traded in a recalled Cobalt for a new car purchased a GM product — a higher loyalty rate than the OEM enjoyed before the recalls. And of those GM trade-ins, 46 percent switched out their Cobalt for a new Chevrolet, resulting in the highest brand loyalty rate since October 2012.
“For the most part, recalls have not discouraged Cobalt owners’ loyalty to GM and Chevy,” notes Jessica Caldwell, senior analyst with Edmunds. “GM has done a good job communicating new-car deals to affected Cobalt owners, many of whom were probably getting close to buying a new car anyway.”
Another explanation for the unprecedented sales figures for GM across the board is that many customers demonstrate little concern for recalls, life-threatening or otherwise.
“Many customers are pretty numb to recalls,” says Chris Erickson, general sales manager of Crippen Buick GMC. The Lansing, Mich., store is one of many points that contributed to GM’s gains in the first half of 2014. While many customers have come in loaded with questions, Erickson says he has seen few complaints. In fact, the group’s Buick sales are up by 48 percent this year, and his GMC numbers are up 62 percent. “We’re choosing to look at the recalls as a really good thing. It’s given us exposure to a lot of new customers who wouldn’t have otherwise come in.”
Erickson is not the only dealer to find a silver lining. As a result of the recalls, Kusey-Rechsteiner says Graff Chevrolet is planning a series of educational courses for its community. Past clinics have focused on topics like texting and impaired driving; future installments could include showing drivers how to control a vehicle if they were to lose power steering and brakes. “This isn’t just something that can happen with a faulty ignition switch,” Kusey-Rechsteiner says. “This could happen if the alternator goes out on your vehicle, and there’s an entire generation out there who wouldn’t know what to do.”
Meanwhile, every report from the OEM indicates that the company is continuing to work overtime to correct any safety issues and make the most of a difficult situation. “GM is using these recent product recalls to strengthen our company,” GM’s Carney notes. “Our goal is to set a new industry standard for safety, quality and customer experience.”
Stephanie Forshee is the former senior editor of Auto Dealer Monthly and F&I and Showroom. She has expertise in dealership operations, sales and F&I. [email protected]