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What recalls? GM sales still rise

Tuesday, July 01, 2014 - 02:08

U.S. auto sales came in stronger than expected, with General Motors still showing gains despite recalling 29 million cars this year. Bobbi Rebell reports.

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U.S. automakers didn't miss a beat in June- dealerships armed with new products defying expectations for softer sales. Recall-plagued General Motors up one percent in June. Ford, a company transitioning to new models, also better than forecasts. Chrysler, Toyota and Nissan posting the biggest gains. With the average car around 11 years old- buyers want to treat themselves to something new: Morningstar's David Whiston: SOUNDBITE: DAVID WHISTON, SENIOR EQUITY ANALYST, MORNINGSTAR (ENGLISH) SAYING: "I think there is a lot of reasons to go into the show room and get a car that has a lot more active safety features or a lot more info-tainment than even, say, a 2008-2009 model let alone a 2002 model year." According to research firm J.D. Power- Consumer spending on new vehicles in the first half also reached a record $194 billion. Average transaction price? close to $30,000. Kelley Blue Book's Senior Editor Karl Brauer: SOUNDBITE: KARL BRAUER, SENIOR EDITOR, KELLY BLUE BOOK (ENGLISH) SAYING: "They are all going up, and this is great news for all these automakers because higher transaction prices mean higher profit. So they are moving in a direction that these guys would like. Now, it's important to keep one thing in mind, and that is the lease situation. Meaning that lease rates are higher really than they have ever been before. They are above 25 percent." He says that consumers focus on the monthly payment- and don't feel the pinch of higher prices. Consumers also haven't focused on GM's recalls- but Brauer warns now that new cars are included- that could change. SOUNDBITE: KARL BRAUER, SENIOR EDITOR, KELLY BLUE BOOK (ENGLISH) SAYING: "The reason that it hasn't impacted their new cars so far is that most of these products are older, out of production vehicles and new car buyers just don't even consider it related to what they are looking at when they go into the showroom now. But some of the new cars that were just added to the recall yesterday are in the showroom now. This will be a real test to see how far GM can push these recall numbers- they have gotten quite high- before it impacts their new vehicle sales." For the year though- auto industry sales look to come in strong- already on track to beat forecasts of 16.4 million vehicles.