Product Recalls

GM offers employee pricing to owners of recalled cars

By Kelsey Mays
The front of the General Motors world headquarters complex sports a new banner to proclaim its return to the NYSE November 18, 2010 in Detroit, Michigan.
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General Motors is offering employee pricing on a new GM vehicle to owners of 2.6 million small cars under recall for faulty ignition switches. Some 2.2 million of those recalled cars—a slew of 2000s-era Saturns, Chevrolets and Pontiacs—are in the U.S., with repair work currently underway.

The quiet move comes weeks after GM said it would offer $500 off the purchase of a new vehicle to affected drivers—a provision that ran through April 30. The automaker's latest program, also unadvertised, will save even more money for those who use it.

"This isn't something we're marketing, but it's just something the dealers have in their toolbox," GM spokesman Jim Cain told us. "People are taking advantage of it. The numbers — we're not going to disclose the numbers at this time, but it's several hundred. And you know (it will) probably increase as time goes on."

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How much does employee pricing save? Cain said he'd "prefer not to" reveal that but confirmed that the prices are generally under invoice, and — a crucial detail — owners can pile any existing cash-back offers on top of them.

"They have to have a recalled vehicle in their household, and it doesn't require a trade (in)," Cain said. "It becomes a no-haggle price, but you are eligible for other discounts that might be in the market. ... You'd get employee price plus any additional cash."

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Though it sounds tempting, it's unclear if typical owners of the 2003 to 2011 cars —especially the older models— would be able to afford, or qualify for, new-car loans. The cars often are on second or third owners, either people who can't afford more than the few thousand dollars for, say, a 2005 Chevrolet Cobalt, or who use them simply as "beaters" — essentially, spare cars or ones used for chores or daily commutes instead of newer cars.

The recalled models that wind up being traded-in for other vehicles at a GM dealership have to be checked for all recalls and have all recall repairs made before they're resold, says GM spokesman Greg Martin. That's part of the dealers' franchise agreement with GM.

"We don't expect a lot of trade-ins, and for those that are traded, we have no special plans. There always is a market for low-price, high-mileage used vehicles," Martin said.

He said GM continues to forecast an October completion for the recall repairs.

Among the most attractive offers are up to $1,500 off certain 2014 Chevrolet Cruzes and $2,500 off 2014 Chevrolet Malibu sedans, as well as up to $4,750 and $3,750 off 2014 Chevrolet Silverado and GMC Sierra 1500 pickup trucks, respectively. Buick, meanwhile, offers up to $1,500 off the LaCrosse or Enclave. Subtract those amounts from the employee pricing, and you could see serious savings on a new car.

If affected drivers want a used GM replacement, the automaker will offer $500 off the purchase of a GM certified pre-owned vehicle, Cain said.

--By Kelsey Mays, Today