In September 2015, AutoNation CEO Mike Jackson announced that AutoNation would discontinue selling any vehicles – new or used – with open recalls. This new policy includes not just those vehicles intended for retail, but also vehicles headed to wholesale buyers. The decision, while admittedly costly, is one that Jackson believes is the right decision as consumers buying vehicles from dealers are typically under the impression that all recall work has been completed and that they won’t have to worry about exploding airbags or bad ignition switches. This policy was extended to all 237 AutoNation stores. At that time, Jackson implored all dealerships to join in this movement and hoped that it would become an industry standard.
According to Jackson this new policy affected about 16 percent of the vehicles within AutoNation’s entire inventory across all dealerships. The next move was to replenish their inventory. AutoNation went on a mission to acquire 10,000 used vehicles to replace the dormant ones that had been taken out of their stores’ inventories while awaiting recall repair work. Of course, acquiring so many vehicles meant getting aggressive at auctions and other vehicle acquisition channels. The result is a decline in available used car inventory while prices paid to obtain front-line ready units by dealers outside AutoNation dealerships has increased.
Arguably, because of its size, AutoNation has the financial means to ground a good percentage of their vehicles, while many smaller franchises or groups may not. Having to sit on vehicles for an undetermined amount of time can be a scary proposition for dealers, and very costly. Should other dealers follow AutoNation’s lead, it could also affect the value offered to customers on trade: if, upon appraisal, the trade-in is found to have an existing open recall.
Perhaps this is why the industry as a whole hasn’t embraced Jackson’s vision. That vision, however, may be about to provide AutoNation a unique selling proposition and they are betting it will. Starting in March, in combination with a charitable campaign for cancer research, AutoNation is planning a $10 million campaign to raise public awareness that no AutoNation store will sell any vehicle with any open recall – even if that recall is something as minor as an outdated owner’s manual.
Recalls are a huge deal for consumers. They represent real – and in some cases life threatening – danger. The simple knowledge that, at least for now, the only dealerships in the country that will guarantee any vehicle purchased from them has no open recalls may just provide AutoNation with a competitive advantage. Will it force other dealers to follow suit? Or will AutoNation continue to build its brand image using the most important factor that oftentimes makes a consumer choose one dealership over another – trust? Only time will tell.
My hat is off to you, Mr. Jackson.