October 18, 2021

Recall Obstacles

NAC Blog
NAC Blog

Recall Obstacles

We've covered how recall repairs can present excellent opportunities for growing your service business, but there are some obstacles that make handling recalls more challenging. Knowing how to navigate these factors will ensure that your customers are happier, their vehicles safer, and your store more profitable. Ready to learn more? Then keep on reading.

Selling Pre-Owned Vehicles with Open Recalls

Inventory challenges in the new vehicle market have filtered down to the pre-owned market as fewer trade-ins and lease returns become available for resale. Through September 2021, used vehicle supply levels remain much lower than is typical for this time of year.

Dealers are understandably eager to snap up as many quality used vehicles as they can to keep their lots stocked, but what if those vehicles have open recalls? Sean Reyes of Recall Masters discussed this issue with NAC’s Corey Smith, and it’s not as easy knowing the laws.

While there are federal laws against selling new—i.e., previously untitled—vehicles with an active recall, no such federal laws exist with respect to used vehicles. However, dealers should be very aware of state-level product liability laws: these statutes could result in the dealer being held liable if an injury or death occurs as a result of the open recall.

Never assume that a disclosure form will protect you: it could simply become evidence in a future lawsuit, proof that your store knowingly and willingly sold a dangerous, defective vehicle. Compliance is a critical component of a successful dealer’s business strategy and, managing your approach to recall repairs is no exception.

Every dealer principal should consult their legal counsel to discuss the best course of action with respect to used vehicles with open recalls. Be certain that the dealership has a process in place that ensures recalls are up to date and that the store is protected from liability risks—and that all employees know and follow it.

Understanding Recall Responsibility and Impact of Consumer Experience

The way vehicle recalls are handled varies around the world, but in the US the responsibility lies with the vehicle manufacturer more so than the consumer. Essentially, the current recall system is that manufacturers alert the National Highway Traffic Safety Administration—or NHTSA—about vehicle defects that require repairs.

This set of procedures has been in place for many decades, but as vehicles become more complex the recall system in the US is showing signs of strain. Today’s vehicles feature more numerous and sophisticated parts and systems, particularly when it comes to technology and software; recall volumes multiply even as older notices remain unrepaired, causing a significant backlog and safety risk.

The auto industry has long taken a “self-regulation” approach, aiming to resolve issues and challenges effectively and satisfactorily without generating additional government oversight. Some worry that when it comes to recalls, time is running out to avoid new legislation and regulation for these repairs.

The Takeaway

For dealers, Sean Reyes believes that making the recall repair process more appealing to consumers could achieve the dual goals of self-regulation and service business growth. Embracing pandemic-era features such as mobile repair, pick-up and drop off, and enhanced online functionality is a great way to use things that consumers like to make recalls more consumer-friendly.

Dealers should also work to streamline their intake and appointment processes for recalls, whether that means expanding online functionality or contracting with a third party to help handle calls. If customers are happier with their recall repair experience, they are likely to respond to future notices more readily; with more consumers treating recalls as important and timely issues, the backlog of open repair orders will become smaller and more manageable.

Looking for more insights on this topic? Check out our YouTube video of Sen Reyes on the NAC podcast, Fixed Ops 5 by clicking this link.

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