June 5, 2014#

Why Hasn’t GM’s Recall Eroded Sales?

Remarkably, GM’s sales rose 13% in May. Granted, total U.S. car sales were up 11%, with all major automotive companies enjoying significant growth. Still, given the massive on-going negative news concerning the death of 13 people driving GM cars, one has to wonder why is it that car buyers don’t appear to be factoring this into their purchase decision and bypassing GM cars altogether?   Does GM have a magical fortress around its brand?

According to industry analysts the major reason GM’s sales aren’t suffering is that consumers don’t associate the recall of GMs largely discontinued brands (Saturn) and models (Chevy) with the company’s new vehicles. In other words, Buick, GMC and Cadillac appear to be disassociated with the recall; so as separate brands they remain largely intact. The same goes for Chevy trucks, which appear to be viewed as a distant relative of the core Chevrolet brand, far enough removed to avoid be associated with the recall problem.

In addition to the protective benefits that come from cultivating separate and distinct brands underneath a parent umbrella, there’s another mitigating dynamic which has kept GM’s sales from being adversely affected despite the company’s lack of transparency and its failure to respond with corrective actions: namely, while they don’t like them, consumers have come to expect and accept recalls within the auto industry.   In 2010 when Toyota was dealing with it’s exploding cars many experts wondered if they’d survive the negative press fall-out. Not only did they survive, they thrived as a business and a brand.   GM will too.