GM does not have liability for claims from accidents prior to July 2009 as part of its bankruptcy reorganization. But given the circumstances, GM will negotiate settlements for all victims we bet.
Transaction prices gathered from used car auctions show that GM’s recall of 2.6 million cars for unsafe ignition switches in February has not affected used car prices – at least thus far.
On a sales weighted basis, prices of 2005-2010 Chevy Cobalt models fell by 9.4% from March to June. By comparison, overall compact car segment prices declined by 10.6%. Prices for Chevy’s recalled HHR fell by a smaller 6.9% over the period.
The recall covers Chevrolet Cobalt and HHR, Pontiac G5 and Solstice, and Saturn Ion and Sky models produced for model years 2003-2011.
“Chevy Cobalt prices have continued to move in a manner similar to competitive models within the compact car segment,” says Executive Automotive Analyst, Jonathan Banks at NADA Used Car Guides. “Cobalt prices haven’t declined any more dramatically than those of the Dodge Caliber or Ford Focus.”
This is consistent with other large recalls. Used vehicle prices weren’t really affected when Ford recalled ~4.5 million vehicles ranging from 7-17 years old in 2009 because of defective cruise control components that could overheat, smoke or burn, in spite of well publicized instances of owner’s houses being ablaze as the vehicles were shot off; and despite Ford’s stonewalling of the clear safety defect for years.
Toyota’s experience was the opposite, though. Used Toyota vehicle prices dropped when the automaker issued a series of recalls for unintended acceleration and stuck gas pedals between November 2009 and February 2010. Nearly 8 million vehicles were recalled in the U.S. covering a wide range of admittedly younger models aged between 1 – 6 years old.
The impact of Toyota’s recalls on prices of its used vehicles was evident at the start of 2010. Toyota prices bottomed out by April 2011, within two months of issuing the last safety recall related to the defect. NADA estimates that at its lowest point, Used Toyota vehicles lost roughly 40% of the price advantage it had held over its competitors before the recalls.
“At this point we’ve observed nothing to indicate that similar movement is occurring on affected GM models,” says Banks.
