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Prices of GM Used Cars Virtually Unaffected by Recalls


As with the price of its stock, recalls and other legal hassles involving General Motors’ older-model-year cars are having virtually no impact on the value of the corporation’s used cars overall. That’s good news for GM owners who are selling, trading in or escaping a lease. It’s not such good news for shoppers hoping the negative news reports surrounding some older GM cars will drag down values across the GM used-car spectrum, lowering prices.

Both GM’s stock price and its rate of new-car sales have remained basically unchanged through the storm of negative publicity so far. The same seems to be holding true for the value of GM used cars as well.

GM Used-Car Value Trends

Based in Cincinnati, Ohio, Swapalease.com helps to match car lease holders wanting to get out of their leases with qualified consumers willing to take over those leases and assume the remaining monthly payments. According to Swapalease.com, the lessee often offers a cash incentive to sweeten the deal in these person-to-person transactions. Incentives, according to Swapalease.com, are a reliable measurement of used-car values. In May 2014, such cash incentives were down across the board from May 2013, and GM cars only comprised 5 percent (well within historic norms) of those total incentives.

Atlanta-based Black Book manages weekly data from wholesale used-car auctions all across the U.S. It reports that, so far at least, the used-car market for GM cars remains unscathed: Auction prices (the prices dealers pay for cars) are holding steady with the rest of the market.

What the Experts Say

Experts at Swapalease and Black Book agree that one reason GM used-car values are holding is that the public is simply becoming numb to what has nearly become the recall-report-of-the-week. “(Recalls) are from nearly every manufacturer and (consumers) understand the vehicle will be repaired,” said Black Book’s Ricky Beggs.

The comments from Swapalease.com were similar: “With manufacturers focused on more transparency, a larger number of recalls have been instituted since the recession,” said Scot Hall, the site’s executive vice president. “We believe consumers are becoming immune to the issue of recalls in general.”

A recent Swapalease.com customer survey discovered that 90 percent of drivers believe recalls to be a part of everyday life, and insist recalls won’t change their personal purchase decisions.

Black Book’s Beggs further speculated that another reason prices are holding firm is that many of the GM cars involved are older models whose values were already fairly low.

What it means to you: If you own a GM car, you may breathe a little easier knowing that its value, at least to this point, is holding steady in relation to the rest of the market.

 

Russ Heaps
Russ Heaps is an author specializing in automotive, financial and travel news. For nearly 35 years he has covered the automotive industry for newspapers, magazines and internet websites. His resume includes The Palm Beach Post, Miami Herald, The Washington Times and numerous other daily newspapers through syndication. He edited Auto World magazine, and helped create and edit NOPI Street... Read More about Russ Heaps

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