GM Sales Rise Sharply Despite Recalls

One possible explanation is that GM is cutting its prices. According to new data from Kelley Blue Book, the average selling price of a GM vehicle fell by 0.4% month-over-month in May, even though prices were 1.6% higher compared with May 2013 prices.

That is still the smallest year-over-year increase among the Big Three U.S. automakers. Chrysler has increased its average selling price by 4.8% year-over-year, and Ford Motor Co. (NYSE: F) has raised its prices 1.8%. The jump at Chrysler is due primarily to the new Jeep and Ram truck designs. Volkswagen has seen a price hike of 5.5% year-over-year, but that is due to more sales of the company’s higher priced Audi brands and decreasing sales of the VW brands.

In 2014, GM’s average sales price has dropped every month on a sequential basis: January’s price was down 1.9% from December’s, February’s average was down another 0.2%, March saw a drop of 1%, the average fell 0.2% in April and another 0.4% in May. The average selling price for a GM vehicle in December was $36,319, and that has dropped to $34,783, an overall decline of $1,536, or about 4.2%. For the 284,694 vehicles sold in May, GM left about $437 million on the table.

Some of the biggest discounts have come on the company’s Chevy Silverado pickups. Just ahead of the Memorial Day weekend, GM offered the Silverado 1500 Double-Cab All Star Edition with a $4,750 cash allowance, $3,100 discount of MSRP and $750 option discount package. Related Silverado 2WD and 4WD V8s also had incentives that totaled nearly $8,000.

Reuters reported exclusively late Monday that the number of deaths related to GM’s defective ignition switch may be as high as 74, far beyond the 13 deaths currently linked to the faulty switch.

While the massive recall of GM vehicles does not seem to have affected total sales as negatively as we might expect, the company has been pricing its vehicles aggressively and that has to have had an impact on overall sales. Leaving some profit behind is better than no profit at all.

GM shares traded up about 0.9% in the noon hour on Tuesday, at $35.16 in a 52-week range of $31.13 to $41.85.

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