Car dealerships are staples of Main Street America.
Many are local, often family-owned businesses that tend to customer relationships from the day of the sale to the 150,000-mile service.
But when a major recall is announced, such as General Motors‘ recall of 2.6 million vehicles related to faulty ignition switches, car dealerships find themselves on the commercial front lines. A local dealership’s response can factor enormously in determining future customer goodwill for a brand, as well as its future sales.
Peter Morley has been selling Chevrolets for more than 30 years. He owns Maritime Chevrolet in Fairfield, Connecticut, which he runs with his wife, Shelley, and his brother, Stephen.
“This one’s very serious … because it’s a safety recall where people’s lives have been lost,” Morley said.
Morley’s mechanics are replacing the switches as quickly as they can. GM has been shipping new ignition switches since April and Maritime Chevrolet has been getting as many as six each day. In all, Morley is expecting to fix more than 200 of the faulty ignition switches.
Until the replacement parts for all of the cars come in, he is doing his best to accommodate his customers.
“If the customer’s not comfortable driving the car, they can park it and they can get a rental car at no expense to them until their car is repaired,” Morley said. “I know we’re going to do everything we can for our customers to make sure that they’re safe and their cars are repaired.”
General Motors dealerships have been “empowered to take extraordinary measures and treat each case specifically,” according to CEO Mary Barra. That includes a rental car free of charge. General Motors has provided 45,000 loaner cars to customers who own recalled vehicles.
Bill Kay, who runs Bill Kay Chevrolet in suburban Chicago, is another dealer responding to the recall, which has been linked to at least 13 deaths.
“We don’t take that lightly,” Kay said.
Despite the severity of the recall, Kay said he doesn’t think the recall will have a major effect on the dealership’s new car sales
“I think [customers] are pretty confident in the General Motors product,” he said.
That sentiment was reflected in the automaker’s sales, which have been up since the company first issued the recall earlier this year. For the month of April, GM reported an 8 percent year-over-year increase in retail sales, or vehicles sold to individual buyers.
Sales at its Chevrolet brand, which has been the nameplate most associated with the ignition switch recall, were up 5 percent for the month, compared with the prior year. GM’s retail sales in March, the first full month after the recall was first announced, the automaker’s retail sales were up 7 percent compared with the year before.
“I think six months or a year from now we’ll look back on it and we’ll say, ‘We got through it. We took care of the customer,'” Morley said “That’s the most important thing, taking care of the customer.”
—By CNBC’s Michael Beyman.
CNBC tells the story of one of America’s most iconic companies, now in the throes of a deepening crisis. Watch Investigating GM: Failure to Recall on May 18 at 10 p.m. ET / PT on CNBC.