The Upside of GM Recalls

June 25th, 2014

GM-recall

There’s a silver lining in every bad situation.

Sometimes you just have to look on the bright side.

After the rain comes a rainbow.

Every rose has its thorn.

Ridiculous clichés aside, there’s always an upside to even the lowest of situations. The General Motors ignition recall is certainly a low point for the world’s largest automaker, but some people are enjoying the benefits of said recall.

Who could possibly benefit from the disaster and tragedy of one of the biggest and most controversial recalls in history?

Car dealerships, of course.

When an automaker recalls a set of vehicles, the dealers get paid for the fix, but the customer usually receives the service for free. The recall gets customers back into the service center, where the dealer can upsell them on other maintenance and repairs.

An NPR news story said,

Selling maintenance to customers is a really big thing for dealers because their profit really comes from selling parts and services more than selling new cars.

It seems counterintuitive that recalls can have a positive effect on dealers and customers, but NPR quoted a survey that said more than half of people felt that recalls helped increase brand loyalty to their automaker, because recalls increased their reputation for taking care of the customer.

Plus, getting previous customers back into the dealership can help convince them to trade the recalled car in for a new model. Surprisingly, GM’s stock prices and car sales have not been hurt by the recalls.

This could change my perception of the purpose of recalls.

Rather than faulting an automaker for producing a defective car that needs fixing, maybe recalls should be applauded for inventing an all-new method of marketing.

Do automaker recalls make you more or less likely to purchase a new car?

-tgriffith

Find Used Cars in Your Area at CarGurus

Be Sociable, Share!

  1. No comments yet.
  1. No trackbacks yet.