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Associated Press
General Motors reports increases in used and new car sales despite millions of cars being recalled. Cars such as the Malibu have retained or increased their value, sometimes more than rival vehicles in the same market segment.

GM sales thrive amid recalls

Used-car values holding up, too

– Consumers looking for a used vehicle aren’t shying away from GM models – even though more than 20 million GM cars and trucks have been recalled this year.

General Motors cars such as the Chevrolet Malibu have retained or increased in value, sometimes more than rival vehicles. And sales of new cars aren’t slowing, either, up 13 percent in May.

GM has issued 44 recalls in North America this year for parts including ignition switches and air bags. The most serious is for ignition switches in 2.6 million small cars linked to more than 50 crashes and at least 13 deaths. Investigations into that recall have exposed GM as a company that was too slow to react to serious safety issues.

In the past, consumers punished automakers for big recalls. Those companies lost market share – Toyota’s dropped 2 percentage points over 12 months when it recalled 14 million cars for unintended acceleration. Yet GM’s has held fairly steady so far, around 18 percent.

GM has cautioned that an ongoing companywide safety review could produce even more recalls – just Monday, it recalled an additional 3.4 million cars for a separate ignition switch issue – so consumers might still decide it’s smarter to buy their wheels elsewhere.

But for now, experts say, GM has retained buyers’ confidence by appearing to act quickly on safety matters – even though GM’s internal investigation into the small-car switch recall showed that employees took years to realize they had a safety problem.

“People are associating that with being vigilant more than being careless,” said Larry Dominique, president of ALG, formerly Automotive Lease Guide, whose data are used by dealers to set values of leased cars.

That could explain why the value of the 2010 Chevrolet Malibu rose almost 3 percent from February, when the recalls started, through May, according to ALG. That compares with midsize cars as a whole, which dropped in value by 1 percent. The Malibu has been part of five recalls this year.

The value of most other used GM cars also rose. The exception: the Chevrolet Cobalt, which is at the heart of the first ignition switch recall. About 1 million Cobalts are being recalled. Of the 13 deaths GM counts, nine occurred in Cobalts.

ALG says the value of 2010 Cobalts dropped 2.4 percent from February through May, but the compact car segment’s value rose almost 3 percent.

That doesn’t mean the cars won’t sell. At L.A. Sales in Oyster Bay, New York, on Long Island, part-owner Andy Kaufman recently sold a 2005 Cobalt for just under the $5,000 he was asking. The buyer, he says, had no concerns once Kaufman showed him the switch had been replaced.

Experts say the volume of recalls has taken away some of the fear factor.

“I’m beginning to wonder if the consumer is almost numb to the next headline that comes out,” says Ricky Beggs, a senior vice president of Black Book, which also monitors used car prices.

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