General Motors spent much of the first half of the year handling crisis control over its massive amount of vehicle recalls, including the ignition switch problems in discontinued models. Now with autumn less than two weeks away, NADA Used Car Guide is finding only marginal impact left on the brand and its vehicles.

Analysts explained that GM’s ignition switch issue is the first recall event since Toyota's unintended acceleration problems five years ago with conditions grave enough to threaten brand value. To date, NADA UCG indicated GM has recalled 2.6 million compact cars globally for defective ignition switches that could be inadvertently switched off preventing airbag deployment in the event of a crash.

Despite being associated with multiple deaths and intense media coverage, NADA Used Car Guide executive automotive analyst Jonathan Banks pointed out, GM's new-vehicle sales and used-vehicle prices have gone relatively unscathed.

"GM's new-vehicle sales are up 3 percent year to date and we've observed a just slight 1- to 2-percentage-point decline in the competitive position of used Chevrolet car prices since April — discernible, but far short of the compelling evidence collected after Toyota's recalls" said Banks, who will be part of the wide array of industry experts participating in panel discussions and more at Used Car Week.

 With more than 39 million vehicles recalled for safety-related issues through August, Banks said that 2014 is on pace to shatter the previous high set in 2001 when 38.8 million vehicles were recalled for various defects.  While most recalls are simple, he acknowledged on some occasions a recall is serious enough to have a lasting effect. 

NADA UCG explored the effect that major recalls have had on automaker's new- and used-vehicle sales in its latest white paper titled, “The Impact of Vehicle Recalls on the Automotive Market.”

Banks said, “Research has shown that minor, well-handled recalls have an insignificant effect on automakers. However, cases involving a large number of vehicles, numerous reports of severe injury or death, and extensive media coverage can impact market performance.”

Brand perception prior to a recall determines the severity of the damage, according to analysts. To illustrate this point, NADA UCG analysts examined the market impact of the high-profile 2000–2001 Ford/Firestone tire and 2009–2010 Toyota acceleration recalls, as well as the General Motors ignition switch recalls that have dominated industry headlines this year.

In 2000 and 2001, Bridgestone/Firestone and Ford recalled millions of Firestone tires to address tires that were failing prematurely on Ford SUVs. The defect caused multiple deaths and captured media headlines for an extended period of time. Even so, the impact to used Ford truck prices was minimal, according to the white paper.

“Although Ford’s competitive position was slowly getting better, consumer expectations of the brand were relatively low at the time,” said Mike Stanton, vice president and chief operating officer of NADA UCG.

“By NADA Used Car Guide's measurement, the Ford/Firestone tire recalls reduced the competitiveness of Ford's used truck prices by just 2 to 3 percentage points at its peak. By 2002, Ford truck prices had essentially reassumed their pre-recall trend,” Stanton continued.

By contrast, analysts noticed that Toyota fared much worse when it recalled nearly 8 million vehicles for issues related to unintended acceleration in late 2009 and early 2010.  Unlike perceptions of Ford earlier in the decade, they said the universal perception of Toyota as a builder of high-quality, reliable vehicles led to a dramatic contrast between pre- and post-recall perceptions of the brand.

Before the recalls, NADA Used Car Guide indicated that used Toyota cars and trucks carried prices nearly 40 percent higher than those of direct competitors. Afterward, Toyota's advantage over the competition was reduced to 30 percent — 10 percentage points below its pre-recall position.

Click here to download the full white paper from NADA Used Car Guide.