GM offers $25 gift cards for recall repairs

Melissa Burden
The Detroit News

General Motors Co. is offering $25 gift cards to several hundred thousand owners of recalled Chevrolet Cobalts, Saturn Ions and other older cars if they bring their vehicles into dealerships to have ignition switch repairs completed by Dec. 1.

The financial incentive is highly unusual in the auto industry, which typically sees about one in four cars left unrepaired in a recall.

More than 1.27 million older Cobalts, Ions and other cars with faulty ignitions switches have been repaired through Oct. 27 out of 2.59 million GM recalled earlier this year. The ignition switch can move out of the “run” position while driving, causing the driver to lose power steering, braking and, in a crash, air bags might not deploy. The company initially attributed 54 crashes and 13 deaths to the problem, but an independent expert has approved compensation for 30 deaths linked to the problem.

GM’s supplier Delphi Automotive finished making all parts necessary to complete repairs ahead of an early October target. But the number of people taking their cars into dealerships for repairs has slowed in recent weeks.

Brochures about the gift card program started going out last week to people who have taken no action to get their vehicles fixed, GM spokeswoman Ryndee Carney said. The promotion is available to around 700,000 people, but only those who haven’t ordered parts or contacted a dealer to get their ignition switch repaired, Carney said; Owners who have ordered parts but haven’t had their cars repaired aren’t eligible for the gift cards, she said.

“We’re reaching out to them in a variety of ways,” she said. “One of the things we’re doing is giving them an opportunity to get a $25 gift card.”

Owners of the recalled cars who complete their repairs at dealerships by Dec. 1 will receive a code and can go online to select a gift card from seven retailers including Amazon, AMC, Applebee’s, Bass Pro Shops, Red Robin, Starbucks or Wal-Mart. Carney said the gift cards should be mailed to customers within two to four weeks. If 700,000 people took advantage of the program it could cost $17.5 million.

Automotive News reported the gift card effort by GM Tuesday.

GM executives repeatedly have stated they want all recalled vehicles to get repairs. The average recall completion rate in the U.S. is about 75 percent each year, but the rate for older vehicles is much lower, according to the National Highway Traffic Safety Administration.

A NHTSA spokeswoman on Tuesday said the regulatory agency is supportive of GM’s gift card efforts and encourages GM to do everything it can to get customers affected by the recall into dealerships to repair their vehicles. GM held focus groups this summer and considered various incentives. The company has been in talks with NHTSA for months to find ways to motivate reluctant owners to get to the dearlership.

In 2010, in the height of Toyota Motor Corp.’s unintended acceleration recall, Toyota gave money to dealers to offer incentives to customers. Dealers then offered customers things such as gift certificates to nearby restaurants while vehicles were getting fixed and 24-hour service to help encourage people to have their vehicles fixed, said Mike Michels, vice president of corporate communications for Toyota.

The initiatives helped “enormously” with response rates, Michels said.

Karl Brauer, senior director of insights for Kelley Blue Book, said GM is taking an atypical approach to ensuring more people get their vehicles fixed.

“I think it’s a great idea,” Brauer said. “It’s another kind of break from GM’s past, putting this extra effort and resources into getting people to respond to these recall notices. It just shows a heightened level of commitment to fix these ignition switches.”

Detroit News Staff Reporter David Shepardson contributed

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