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Recalls don't dent auto demand

Tuesday, Jun 03, 2014 - 01:42

June 3-Car sales shot up to their best level in seven years for some automakers, including General Motors, which continues to deal with recalls. Bobbi Rebell reports.

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Automakers are back in the fast lane. May was a great month- sales at the major automakers came in higher than expected - with GM and Chrysler's numbers the best in seven years- because for consumers- getting money to pay for cars has been getting easier. Wells Fargo Advantage Funds Brian Jacobsen: SOUNDBITE: BRIAN JACOBSEN, CHIEF PORTFOLIO STRATEGIST, WELLS FARGO ADVANTAGE FUNDS (ENGLISH) SAYING: "A lot of that is due to low financing costs. If you look at some of the bargains that you get for buying new cars they are really out there, and that's thanks to the Federal Reserve's low interest rate policy." REPORTER ON CAMERA: BOBBI REBELL, REUTERS REPORTER (ENGLISH) SAYING: "That's also allowing dealerships to charge more money for cars- because for most consumers- it's all about the monthly payment." The average transaction price according to Kelley Blue Book is up to $32,307. Senior Director of Insights, Karl Brauer: SOUNDBITE: KARL BRAUER, SENIOR DIRECTOR, INSIGHTS, KELLEY BLUE BOOK (ENGLISH) "You can extend the loan and reduce the monthly payment you can pay a higher price for the vehicle." Brauer says he thinks car sales will continue at this strong pace- with a run rate of around 16 and a half million vehicles for the year. Recalls continue to be a big issue- in May they far outpaced the number of sales. But ironically- the high volume of recalls may actually be driving demand for new cars. Reuters Ben Klayman: SOUNDBITE: BEN KLAYMAN, REUTERS CORRESPONDENT (ENGLISH) SAYING: "Consumers are tuning these things out. Unless there is some drastic reason they have to pay attention. And even in the case of GM they are seeing that as - those are older cars that aren't sold anymore, so I don't have to worry about that for the newer models. And then for recalls that have to do with the newer models they just seem to ignore those. They shake them off." GM however can't quite shake off its big recall- results of its internal investigation into the ignition switch problems will be out later this week.

Recalls don't dent auto demand

Tuesday, Jun 03, 2014 - 01:42

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