September 30, 2021

Capitalizing on Recall Repairs

NAC Blog
NAC Blog

Capitalizing on Recall Repairs

One in four vehicles on the road today is affected by a recall. For dealerships, this means a lot of extra work for customers you don't currently have a relationship with and who are only coming to you for a free service. To many business owners, this can seem like a nightmare. But if you view recalls as an opportunity to wow a customer and potentially convert them into someone who will come back to you again and again, recalls can be a great way to grow your customer base.

 

In this blog, we'll learn from Recall Masters CMO, Sean Reyes, who shares the things dealerships may not know about recalls and how to take advantage of a huge opportunity to bring revenue into your service department while making the roads safer for everyone.

 

The Recall Crisis

As a shop owner, you want to find the perfect balance of keeping the money flowing and building your customer base. Recalls bring in a lot of work, but put a strain on resources that can make it hard to handle the latter. Every year, the number of recalls and affected cars increases. The result of this influx of recalls is that solutions are outpaced by volume. The problem is worsened by shortages of both parts and labor. This leaves potentially dangerous cars on the road getting stacked up waiting to have what are often crucial repairs completed.

 

Seizing the Opportunity of Recalls

The biggest misconception dealers have about recalls is that there's no money in them. Aside from the fact that 49 states require the factory to reimburse dealerships at retail rates for both parts and labor, recalls present a valuable opportunity for dealerships. When bringing their car in for a recall repair, 52% of customers spend additional money at the dealership. The factory isn't just forcing you to do work, they're forcing paying customers to come give you money. On top of that, 39% of recall customers come back to the same dealership for more work. But the opportunity doesn't stop there. Most people own several cars throughout their lifetime. Between 6-9% of customers will return to the dealership who performed a recall to purchase their next car.

 

Over the past several years, the biggest driver of the growth in recalls has been problems with the software and electronics in the vehicle. As automobile manufacturers continue to embrace technology and place more dependence on digital rather than mechanical solutions, we can expect this trend to continue. Because these are simple recalls that can be handled by an entry-level tech, you can affordably hire more of those to take a load off your master techs and send away fewer highly profitable recall customers.

For even more information on how your dealership can capitalize on recall repairs, check the video recording from our latest episode of Fixed Ops 5. And don't forget to subscribe to our YouTube channel as well as to our Fixed Ops 5 podcast on Spotify, Apple Podcasts or wherever you listen!

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