|Here’s Why the Recalls Haven't Dented GM’s Sales|
|By SUSANNA KIM (@skimm)||Jul 24, 2014, 1:29 PM|
General Motors' 29 million recalled cars since January is costing the car company more than $2.5 billion, but the company's varying fleet of vehicles have prompted a steady sales growth, according to the GM's quarterly earnings.
Despite huge falling profits at the company largely due to the recall and legal expenses, customers are still buying lots of GM cars, according to the car manufacturer's report today.
"GM would have had an outstanding quarter had it not been for the recall expenses," said Michelle Krebs, senior analyst for AutoTrader.com.
The company reported $1.3 billion in recall-related costs in its first quarter and $1.2 billion in the second quarter.
Here are some of the cars that are boosting the embattled American car company.
1. Chevy Silverado
Alec Gutierrez, senior analyst with Kelley Blue Book, called the Silverado a "tried and true favorite."
In GM's second quarter, there were 132,922 Silverado sales, an increase of 5.5 percent compared to the same period in 2013. In June, Silverado sales were up 1 percent compared to June 2013. It's not a huge sales bump, but the Silverado is still GM's best-selling model in its overall lineup and the most profitable by a fairly wide margin, Gutierrez said.
He said full-size pickup trucks provide car companies with anywhere from $3,000 to $5,000 in profit, depending on the model. Meanwhile, cars may yield manufacturers less than $1,000.
"That says while Silverado sales are not knocking anyone’s socks off, it’s an absolutely critical vehicle for GM," he said.
2. Buick Encore
GM's Buick brand had its best June since 2006, the company reported, and that surge was driven by an 82 percent increase in Encore sales, compared to June 2013.
The Encore is within the crossover utility vehicle category, a segment between cars and SUVs. That segment has been growing faster than any other in the car industry, Gutierrez said.
The category is so new that Ford doesn't yet have a vehicle in this category.
"I think that’s why GM is doubling down on that platform," Gutierrez said, pointing to the "fuel-efficient" and "really small" Encore that skews toward a younger demographic.
Jessica Caldwell, Edmunds.com senior analyst, said this subcompact SUV segment is only going to grow in popularity in the next five to 10 years.
3. Chevrolet Suburban
Caldwell said trucks and SUVs like the Suburban, Tahoe and Silverado "have been doing very well for GM as the auto market has embraced them in a big way."
Sales of Chevrolet Tahoe increased 93 percent in June, while Suburban sales are up 73 percent, compared to June 2013.
Caldwell calls this the new "heyday for SUVs." For the past 10 months, light trucks have outsold cars. That's the longest streak since 2005, when a 31-month streak lasted from February 2003 through August 2005, she notes.
4. GMC Yukon
Gutierrez of Kelley Blue Book said SUVs, such as the Yukon, have seen sales, and thereby GM profitability, "growing at a pretty big clip."
GM's GMC brand had its best June since 2006, the company reported earlier this month, with sales up 11 percent compared to June 2013, driven by the redesigned Yukon, up a whopping 120 percent from June 2013.
5. Chevrolet Sonic
Caldwell with Edmunds.com said the Sonic is on the complete opposite side on the size spectrum, as one of GM's smallest products.
Sales of Sonic increased 36 percent in June 2014 compared to June 2013, GM reported earlier this month.
Gutierrez said the Sonic is an example of GM trying to diversify its fleet of cars.
While the subcompact category of cars hasn't been gaining in the industry, the Sonic is gaining traction and Sonic is only behind Nissan's Versa in that segment, Gutierrez said.
ABC News' Zunaira Zaki contributed to this report.