So far, customers haven’t turned on auto manufacturers following their myriad auto recalls this year. That could change in the coming quarters, according to Anil Valsan, lead auto analyst for Ernst & Young’s Global Automotive Center.
“It will certainly having an impact,” Valsan said. “It will come down hard on the automakers.”
Part of the reason the industry hasn’t seen too big of a problem from the recalls yet is that, frankly, it’s affecting most of the companies equally. Sure, General Motors (GM) has had a historically terrible year in the recall department, but Ford (F) and Toyota have been in the news for recalls as well. Valsan did say that there were some auto companies that may be able to come off well compared with the rest of the industry regarding recalls: luxury brands and a few of the German companies.
Moving forward, Valsan said consumers would likely consider the recalls in deciding what cars to buy in the future.
“This will be one of the big questions they ask,” he said. Customers will want to know exactly what a manufacturers plans are if a recall needs to be instituted.
As for car sales, Valsan said things are pretty much on track with 4.4 million cars sold in the second quarter. The industry remains on track to sell around 16.2 million cars for the entire year, the most since before the financial crisis. Valsan doesn’t expect that pace to change in the coming quarters.
“I think we will still see some good positive demand,” he said. He also said it would be a bad sign if companies start offering big incentives, which is a sign that the industry is feeling “desperate” to move product.
This isn’t likely, Valsan said, because the industry is much “leaner” today than it was a few years ago, with a more manageable inventory.