The news about recall marketing is clearly not being shared by GM’s who are #WINNING, by going after recalls and turning them into profits centers for their dealership.

Ray Chevy

But according to Robbie Long, service director for the dealer Ray Chevrolet, recalls have turned into an opportunity. Hundreds of customers bringing old cars into the family-owned dealerships leaving in clean cars with a bucket of goodies. Some driving home a newly purchased car. And the repairs, paid for by automakers, are profitable, dealers say, helping to pay general expenses as well as bringing in customers who might have been lost. “In many cases these are customers we haven’t seen in a long time or have never met before,” said Long. Although the script is not what the dealership would have written, recalls are delivering sales and service prospects to the dealership with a plan.

 

The two dealerships run by brothers Ray and Mark Scarpelli are humming. Ray’s sales were up 13 percent on the year and Mark’s were up 20 percent. GM as a whole posted a 2.5 percent increase in sales in the first half of the year, just a step behind the industry average of 4.3 percent. Ray Chevrolet’s Fleet & Commercial department was recently recognized by Chevrolet for being No. 1 in total Fleet & Commercial Sales in the North Central Region for 2014. The department sold more than 11,700 new Chevrolet vehicles. The sales combined with retail sales made Ray Chevrolet the third-largest Chevrolet dealer in the U.S., according to General Motors.

Interviews by Reuters with dealers across the nation found similar attitudes, for GM, Chrysler and other brands, several of which have now announced multi-million car recalls.

Don Lee, president of Lee Auto Malls in Maine which has 14 new-vehicle stores, mostly Chrysler and various Japanese brands, as well as GMC, said recalls provide “an opportunity to look over the customer’s car at no cost to them,” which often leads to more repair business.

 

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More importantly, he said recalls lead to more sales: he estimates that 15 percent of new car sales at his Chrysler stores come via the service department. GM this week said that it had sold 6,600 cars to customers who traded in vehicles with defective ignition switches.

 

 

GM_Recalls

 

Several factors have combined to turn what started off as a pure public relations disaster into a strong sales year for some dealerships taking advantage of recall marketing. The recall offers at least four opportunities for business: fixing the recalled part, a roughly $250 cost for the average recall repair; other service and repair work; selling new cars; and, for those dealers with loaner car fleets, providing transportation to some waiting customers, paid for by the automaker.

And last but not least, auto recalls have become so common with 75 million cars called in globally by automakers, that consumers are suffering from “recall fatigue” and are not paying attention, so running recall marketing campaigns is becoming the new normal, dealers say.


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