GM sales up in June despite recalls

By Aaron M. Kessler / New York Times News Service

Published Jul 2, 2014 at 12:01AM

It has been a mystery in the auto industry in recent months: How can General Motors, embroiled in a safety crisis that has led to the recall of about 29 million vehicles worldwide this year, continue to have such strong sales?

On Tuesday, GM again defied the negative publicity, announcing that its sales in June rose by 1 percent over the same month a year earlier, to 267,461 vehicles sold, and keeping pace with an overall strong industry performance.

For GM, it was a dose of welcome news, coming a day after another wide-ranging round of recalls — 8.4 million vehicles worldwide — and the announcement of a victims fund for those affected by a defective ignition switch that the automaker has linked to 13 deaths and 54 crashes.

Overall, automakers in June had their strongest monthly sales since before the recession, with a seasonally adjusted annual rate of 16.98 million vehicles sold, compared with 15.88 million a year ago. It is the highest reported rate since July 2006, with 17.16 million vehicles sold. Chrysler led the way, increasing by 9 percent, on the strength of Jeep sales, while Ford struggled, dropping by 6 percent.

Analysts cited several reasons for GM’s performance, like a stronger economy, demand after the bad winter, and to the recalls themselves — which drew people into dealerships.

“Early in the year, the harsh winter dampened sales, but pre-existing pent-up demand only strengthened during this time and since the country warmed back up, car shoppers have been out in full force,” said Jessica Caldwell, a senior analyst for Edmunds. Low interest rates and the proliferation of leasing, she added, have also enticed buyers to buy new cars.

While GM kept pace with the industry, Ford struggled, with sales falling to 221,396, a 6 percent drop over the same month a year ago.

Erich Merkle, chief U.S. sales analyst at Ford, said in a conference call that the company’s June performance was partly because of lower incentives offered last month compared with competitors’.