There are currently more than 63 million recalled vehicles still on US roads and highways, which is surprising when you consider that recall repairs are at no cost to the consumer. So, why are consumers so apprehensive about bringing you their recalled vehicles? Do consumers hate going to the dealership that much? 

A recent survey by the University of Michigan found that 38% of consumers fail to complete recall repairs because they are fearful the dealership will pressure them into additional repairs or services. And, 37% don’t take their vehicles in for recall repairs because of the difficulty involved in giving up their vehicles. Finally, 36% felt the repair would take too long. It doesn’t appear that we’ve done a good enough job of persuading consumers that America’s dealerships are here to help.

These consumer fears seem to track well with the huge amount of recalled vehicles on our roads, versus the relatively small percentage of consumers who actually bring their vehicles in to get an outstanding recall repaired.

To overcome these challenges, one thing you can do is make it very clear in your messaging that your dealership is there to help vehicle owners. That you are only interested in completing the recall repair. In addition, ensure that your service department is set up to handle this unique customer when they do come in.

Yes, I know, service departments are designed to optimize revenue from every customer. And these recall customers can, in fact, be rather profitable due to additional repairs that are needed. But don’t lead with that. These customers have been inconvenienced with a faulty product they now have to bring in to get fixed. Some recalls come with a threat of danger if left unrepaired, which can be very upsetting to the customer. So, make sure everyone - from the receptionist to the service advisor - is trained in correctly handling this customer.

The best start is to simply apologize for any inconvenience the recall may have caused them. Remember, to the customer, your dealership is simply an extension of the OEM. Be smart about scheduling and make sure you have the parts in stock before scheduling the service appointment. If parts are simply not available, have a good explanation ready to sooth your customer. There’s nothing more frustrating to a consumer than to come to the dealership in attempt to get their recall repaired only to be told the parts are unavailable. Make sure that whoever schedules appointments knows which recall work has limited parts availability so they can coordinate with both parts and the service advisor to avoid irritating a customer.

If the recall repair will take a bit of time, provide loaner cars to recall repair customers, if possible. Loaner vehicles can give you a competitive advantage to help in winning that recall repair business. In fact, if your dealership has this service available, it would be wise to start including that messaging in all of your marketing and digital properties. You may be surprised at how far people are willing to drive to get their recall work done with you. Most consumers want their vehicles to be safe. If you can solve this difficulty for them, you could start conquesting your competitor’s service customers.

On the flip side, the survey also asked what would make these customers come in for a recall repair. 52% of respondents replied the ability to bundle a recall repair with regularly scheduled maintenance. And 51% said that a free oil change or tank of gas would be enough.

Perhaps you should consider identifying recall repairs that are lucrative enough to include an oil change or tank of gas and use that in your marketing, and/or identify customers that need recall repairs who are also due for maintenance, and reach out to them.

While vehicle owners are in possession of the recalled vehicles, it is in fact dealerships and the manufacturers who own the problem and the massive risk that each recalled vehicle presents.  There should be no debate about how important recall repairs are. This is a problem that extends beyond the billions of dollars in product liability lawsuits – it is about saving lives and restoring consumers’ perception of the automotive industry.

It’s up to all of us to create the kind of conditions and incentives that compel consumers to bring those recalled vehicles into dealerships.  Whatever the investment your dealership makes in a comprehensive recall program, it is likely falling short of the estimated opportunity. Are you getting your share of the 63 million recalled vehicles in your service lane? If not, then it’s time to sharpen those pencils again.

Imagine feeling ill enough to visit the local hospital. Most of us identify the hospital as the one place that has the combination of diagnostic technology, patient history, the knowledge and the skilled clinicians in one location. In order for physicians to accurately diagnose your ailment, they take blood samples and conduct a multitude of tests. As a patient, it would be reasonable to expect to be diagnosed and receive the prescribed treatment. In fact, many would believe that, if this barrage of tests yielded abnormalities in addition to the ailment, the physician would bring them to your attention so that a corrective action could be taken. 

I would think the above scenario wouldn’t seem to be unreasonable to most of you. However, think about the reasonable expectation a customer has when they bring their vehicle into your dealership to get serviced, regardless of whether they know something is wrong with the health of their vehicle or not. They expect that it will be efficiently diagnosed and fixed. Yet, every day vehicles with open recalls pass through service drives without being checked, repaired or notifying the customer.

Many consumers visit dealerships because of their expertise, knowledge and the thorough inspections conducted on their vehicles. They have a reasonable expectation that necessary repairs will be made and, at the very minimum, be reported to them. And, in most cases, they are. However, there is one glaring area where a huge gap exists - recalls.  Some of these recalls can pose a threat to safety or can cause great damage to the vehicle if not attended to.  Failure to alert the vehicle owner of an open recall can be almost negligent in the eyes of the consumer.

Checking a vehicle for recalls can occur in a number of dealership departments - prior to the purchase, at trade in, during vehicle service, or by combing through customer data in your CRM.  These customers have a reasonable expectation that your dealership will have some recall solutions in place to notify, schedule and repair the problem.

Without some sort of recall platform in use and enforced as part of a diligent process, it is impossible to effectively manage the volume of open recalls at your dealership. As a result, customer expectations go unattended to, eroding trust and the customer’s belief that you are the right “doctor” for their vehicle.

You would be wise to have an integrated recall strategy in place across your entire dealership – all departments communicating with each other to identify any open recalls. This has nothing to do with adding another process just to be difficult, it’s a matter of meeting your customer’s reasonable expectations that the vehicle they purchase, or service at your dealership, is safe. They expect that your dealership has done its due diligence to identify any known and unknown issues – and fixed them.

No matter what recall solution your dealership chooses to use, it should be efficient, thorough and timely in delivering the information that customers and your staff require. Is that an unreasonable expectation to ask?

The popularity of transportation networks such as Uber and Lyft has increased vehicle purchase demand by their contracted drivers. These services come with strict vehicle ownership requirements for their drivers, which often motivates a new or used vehicle purchase.

Uber and Lyft are just two examples where consumers are using their personal vehicles in a contracted employment capacity, a trend which is replicated in several industries, from courier services to food delivery. Just as a fleet manager would, these professional drivers scrutinize their vehicles for fuel efficiency, reliability and safety, among other attributes.

Many manufacturers already have agreements in place with Uber and Lyft to provide special pricing to prospective buyers. In addition, some dealers actively pursue these deals through their own in-house sales incentives. Since these drivers are merely contractors, these vehicles are not owned by Uber and Lyft, prompting an interesting question: If, while driving an Uber or Lyft passenger, a driver behind the wheel of a vehicle with an open recall gets in an accident that causes death or injury to the passenger, who is liable for the related damages?

As vehicles are considered property, the insurance company of the at-fault driver is liable for any damage. However, as it relates to a driver of a vehicle with an open recall, what if one of their passengers is seriously injured or killed in an accident? There are a growing number of personal injury attorneys who will argue that the driver of that recalled vehicle is liable, regardless of who caused the accident.

Personal injury lawyers are quick to take up these types of cases and typically target those with the deepest pockets. It’s a pretty solid bet that the Uber or Lyft driver’s pockets are not as deep as the service they are driving for. These drivers are independent contractors, which makes it convenient for Uber or Lyft to assign vehicle safety as part of the driver’s responsibility. It is up to the driver to keep their vehicle serviced and in good operating condition – and that, of course, includes fixing any open recalls. However, as any ambitious personal injury attorney will attest to, for Uber, Lyft and any other organization where a vehicle is used as an integral component to business operations, the question of negligence complicates matters.

Despite the well-intentions of the driver, any open recall can be unresolved for many reasons. The driver may not be aware of the recall or, if they are, perhaps the parts are unavailable, as is the case with faulty Takata airbags. Shelving their vehicle for months awaiting a part is typically not economically feasible for most individuals, much less for drivers who use their vehicles to earn a living. If they can’t drive, they can’t make money. So where does this leave the unsuspecting passenger?

At the moment, vehicle history reports and open recall warnings aren’t part of Uber or Lyft’s app. When a consumer requests a vehicle via the app, how are they to know if the vehicle is safe enough to climb aboard? Short of asking the driver for proof, then scanning the VIN to check themselves, they wouldn’t have a clue about the risk they are taking. Most passengers probably wouldn’t give it a second thought.

However, with more than 63 million vehicles on the road today with open recalls, it seems almost inevitable that there will be a major accident involving a passenger in an Uber or Lyft vehicle that has an open recall. If that happens, a swarm of personal injury lawyers will come circling and Uber and/or Lyft will be named in that lawsuit. Does the legal concept of negligence appear to be a grasp of sorts?  Let’s face it – in today’s litigious world, you could sue a ham sandwich, if you wanted to. 

The legal concept of “negligence” is central to the argument a personal injury attorney might take in such a case. According the National Law Review, “negligence” is an act that can be described as actively doing something, or failing to do something, that others in the same position would find incorrect. This legal assertion has already been used in recall cases to sue dealerships which knew that there was a dangerous recall, but proceeded to sell the vehicle. The legal measure would simply be whether other dealerships would also have sold the vehicle. Given the ease of access to tools and data to identify a dangerous recall, Uber or Lyft would have a very hard time convincing a sympathetic jury that negligence was not at play.

An attorney might contend that Uber and Lyft are guilty of “gross negligence” - carelessness which is in reckless disregard for the safety or lives of others, and is so great it appears to be a conscious violation of other people's rights to safety. It is more than simple inadvertence, but it is just shy of being intentionally evil. If gross negligence is found by judge or jury, it can result in the award of punitive damages on top of general and special damages. This same challenge is currently being used to sue dealerships, independent repair shops, lube shops, and any other automotive facility that could have simply run the VIN and checked for a recall. As the danger of recalls touch on an ever-expanding number of industries, so too will the legal liabilities.

What does all of this have to do with vehicle sales or dealership operations? As Uber and Lyft drivers increasingly realize that open recalls can place them in a perilous liability situation, or that their vehicle could be non-drivable for an extended period of time due to lack of available parts to fix the recall, drivers will be much more particular about the vehicle they purchase.

Checking your inventory for open recalls not only benefits contracted drivers, but also the average driver, who has their loved ones as passengers. Recalls matter more to consumers than most dealerships are willing to admit.

With the massive onslaught of vehicle recalls it is pretty much guaranteed that all parties involved are paying attention. Today that ranges from consumers to OEMs to dealers to insurance companies; and tomorrow that will soon include rideshare companies like Uber and Lyft.

One of the biggest, and perhaps most well-known recalls, is unrepaired Takata airbags which could explode upon vehicle impact. As you can imagine, an exploding airbag is of grave concern to consumers. It is also a major financial liability to the automotive and insurance industries. Due to its massive scale, this recall is exacerbated by lack of parts availability and, while the media feeds consumers stories of death and destruction because of failure to repair these airbags, consumers are faced with long delays and heightened anxiety.

No matter how hard you work to disclose an open recall to your customers, there may come a time when customers start factoring recalls into their buying decisions, based on the barrage of problems, delays and parts availability.

Tools to check a vehicle’s VIN for an open recall are accessible to consumers, who are likely to consult them while perusing your used car inventory. Because of this, regardless of whether it’s legal to sell a used vehicle with an open recall, that vehicle may still end up sitting there on your lot simply because nobody wants to buy it.

Let’s take a look at how open recalls will affect a future buyer’s decision-making process:

1. Conquest – Oh, you better believe that manufacturers with vehicles that aren’t affected – or less affected – by recalls will ramp up advertising to let consumers know just how safe their vehicles are. That loyal brand customer may start rethinking their loyalty should an attractive conquest offer appear. And those messages will be a ruthless assault on unsafe vehicles with deceptive sales practices labeling your dealership as a hungry wolf feasting on unsuspecting consumers.
    
2. Peace of mind – Consumers are bombarded by recall messages daily -- horror stories about the danger of leaving their vehicle unrepaired. Combined with the long wait times to secure the recall repair, whether they’ve been personally affected, or someone they know has, this certainly affects their state of mind. Most consumers don’t have the time, patience or willingness to wait indefinitely for a repair, or to buy and drive a vehicle that could potentially injure, or even kill them. And that makes perfect sense.
    
3. Cost to own – It’s easy to see a future where insurers start factoring recalls into their complicated algorithms for calculating policy holder premiums. Checking insurance costs with your insurance agency is one of the first steps in choosing a vehicle and establishing if it is within budget.
   
   While it does not currently happen, imagine the day when insurance agencies increase premiums on vehicles that are unsafe and could potentially cause an accident – especially those defective vehicles that have dangerous and life-threatening recalls. This could certainly impact whether a consumer buys a vehicle, or starts their search for an alternative.
    
4. Worry-free Inventory – Dealerships love the advantage of offering a “certified pre-owned” vehicle.  Those vehicles typically yield better margins and create a loyal customer who will return for their next purchase. If that’s the case, how would you describe inventory that does not fall into that category? Diminishing margins force dealerships to carefully examine the kinds of vehicles they bring into their inventory.  Imagine if your dealership had the tools to evaluate resale value, prior to acquisition. 

 During trade in evaluation, or at auction, wouldn’t your inventory manager benefit from knowing what that vehicle’s recall status is? Those tools are available and your dealership needs to take an active role in presenting your prospective customers with a better selection of used vehicles.

More than likely, the biggest roadblock in NOT selling used cars with open recalls has been the financial impact dealers face in terms of tied up capital, space to store vehicles while awaiting a recall repair, and lost sales from sitting on those vehicles waiting for parts and repairs.

Large auto retailers such as AutoNation initially took strong positions on recall management.  However, the group changed its position and decided to allow the sale of used cars with recalls when they realized the burden these recalls levied on their dealerships.

Still, the fact of the matter is that consumers only care about one thing: the vehicle they are buying right now. They’ll take action and vote with their dollars before any massive industry change or government intervention.

I’ve mentioned in my past blogs on several occasions how pending legislation which prevents dealers from selling used cars with open recalls is on the horizon. At some point, the issue is unavoidable.

You have a unique opportunity to proactively address a matter that is important to consumers.  In an era where dealerships search for market differentiation, the stage is set for savvy leadership to outpace slow competitors who would rather adopt policies when they reach a critical state, or are mandated from some higher authority. 

Which kind of dealership is yours?

Consumers have plenty of choices when it comes time to buy a used car – private sellers, independent used car lots and, of course, franchise dealerships. Each have their pros and cons, ranging from price, to quality, to reliability and safety. The one edge franchise dealerships may have over all other options is that consumers, in general, believe that a used vehicle at a franchise dealership has been inspected, is of good quality and will be safe.

In some cases, that customer may have been able to purchase that exact vehicle at a lower price from a private seller, or independent dealership. However, they chose to pay a little more for the peace of mind and the backing of a franchise dealer.

What happens when their perception of safety is eroded by the fact that the vehicle was sold to them with an open recall?

Recalls have long been top-of-mind for consumers. News sources, including TV, radio, newspapers and the Internet, regularly blast out messages of doom and gloom to consumers with each new recall – even those that only apply to a single vehicle, as manufacturers are now playing the “better safe than sorry” game.

Franchise dealers, who are also impacted by these recalls, make hard choices on how, when and if to sell used vehicles with open recalls to consumers. Often, it’s not financially feasible for a franchise dealership to simply sit on trade-ins, or other in-stock used vehicles with open recalls without risking the financial health of the dealership. So, even with the best intentions and full disclosure, many franchise dealers continue to sell these vehicles. The problem is that consumers come to the dealership with the assumption that purchasing a used vehicle comes with peace of mind and confidence that the vehicle is a safe and good quality vehicle. They then discover problems. What happens to that customer to erode their confidence in the buying experience with that franchise dealership?

The customer discovers that parts are unavailable and that they have to wait months to get their newly purchased vehicle repaired – and it is not even safe to drive – in the customer’s mind, they brought a dud from your dealership!

You can imagine the frustration they must feel, especially if they found out that you knowingly sold them the vehicle and may not have overtly disclosed the existence of an open recall. However, disclosing that a vehicle has an open recall also presents difficulties for the dealership. If you had taken the time to explain how the airbag is a recalled item that could in fact cause serious injury, and that a replacement airbag will not be available for months, the customer may have thought twice about completing that purchase. Still, when the customer learns about it after the fact, this just irritates them and they distrust your dealership -- even if you gave full disclosure.

There are many things that can go wrong with a used vehicle purchase. I’m certain that you can create a pretty long list. Most of those problems can be rectified. But recall repairs with no parts availability is the problem for which there is really no good solution, as yet. And the only person who will bear the brunt of that frustration is the dealership.

What’s a franchise dealership to do – a bit of a catch 22 dilemma, right? Once that vehicle is in your inventory, you’ve already limited your best options. The smartest decision is to proactively assess vehicles for open recalls at the time of valuation, either at trade-in or at auction prior to placing a bid. Doesn’t an open recall and its proper disclosure affect the consumer’s perception of safety and, subsequently, the sales price? Of course it does! If your franchise dealership is authorized to repair those open recalls you might elect to acquire a trade-in of a particular make versus a make where you have to secure a remedy from another dealership.

The bottom line is that your dealership should be running the VIN prior to purchase (or making an offer) so that you know what you are dealing with. You can get that info right from NHTSA.

Proposed legislation to prevent the sale of any used vehicles with an open recall is starting to take shape on both State and Federal levels. I think the industry would be wise to prepare for some new legislation coming down the pipeline in the not too distant future.                                   

Recalls are such a pressing issue and there is enough confusion out there already with all the media reports and hype. Many consumers are already in a state of electrification. Personally, I believe that a vehicle with an open recall should not be sold until it has been properly repaired, I realize the huge challenge this presents, but there are longer term goals at stake and there are tools to assist. At the very least, your dealership should ensure that recalls are fully disclosed and make a strong attempt to ensure the consumer knows this before leaving your lot.

At the end of the day, effective management of recalls is not only the right thing to do, but the smartest.

In my last blog, I shared some reasons why dealers need to prepare for a constant flow of recall repair work for a long time to come. In this second part, I’d like to lend some further insight as to why savvy and responsible auto dealerships need to develop a strategy for recall repairs. I could not fit them into the first blog without it becoming a bit of a book. So here you go!

(Numbers 1 -4 can be found in Part 1 of this blog)

5. OEMs are building better quality cars, which is great for consumers. However, this also extends the service intervals. In some cases, intervals have increased from 3,000 miles to as much as 15,000 miles. As these increases are fairly recent, there’s no predicting what problems could come up, or perhaps be exacerbated by the vehicle no longer being available to inspect and repair quite as frequently. It’s certainly good for consumers to avoid frequent servicing, but only time will tell what the impact on safety will be when consumers bypass regular vehicle inspection.

6. Due to the huge amount of recent recalls, consumer backlash and the resulting bad press, OEMs are now more proactive about revealing safety issues to the public and faster to issue recall orders. Even the smallest of defects now prompt recalls, as OEMs seek to project a better image to consumers and protect themselves from any liability that might arise from non-disclosure.

7. These days, manufacturers aren’t just under the watchful eyes of the United States government. Overseas actions, changes and legislation could force the hand of one of the domestic OEMS. The changes, recalls or other activities initiated in another country could have an overall effect on the brand worldwide.

8. Due to the volume of negative publicity all of these recent recalls have spawned, consumers are voicing displeasure with the OEM response to issues and the manufacturer’s willingness to correct them. Market share is incredibly important to manufacturers and a slight misstep, or action that doesn’t meet with the general public’s approval, could be disastrous for a brand - as was seen with Toyota. Manufacturers acknowledge this and, in the future, may well be faster to take action to rectify problems and avoid consumer wrath or defection to another brand.

9. Personal injury attorneys are getting a little more aggressive and savvier in their approaches to litigation. Rightfully or not, they now name all potential defendants including OEMs, dealerships, dealership management and even, in some cases, the salesperson involved in the transaction. This makes any vehicle with an open recall that drives off your lot a potential ticking time bomb in terms of liability.

Take note of these points and make preparations in your dealership to accommodate your customers – and safeguard your business – by creating an action plan and being prepared for recall repair work.

It starts with creating a Recall Department and providing the necessary training to address the very unique issues associated with a recall. This is not limited to the vehicles, as a very frustrated and scared consumer also requires special attention. However, if approached properly and treated with care and concern, these consumers evolve into the most loyal of customers.

In an era where dealerships are wrestling with competition to win over the long-term loyalty of consumers, recalls represent a tremendous opportunity for dealers who are willing to step up when the consumer is at the height of vulnerability. Studies in human psychology prove that the foundations of loyalty are best forged during times of crisis.

You don’t need to be an expert in human relations to know the doing the right thing by consumers during a recall episode might also be the smartest for your dealership.

Recalls have reached epidemic levels and stretch the resources of everyone involved – dealers, manufacturers and parts suppliers – as well as the patience of consumers faced with a recall, or who contemplate the purchase of a new or pre-owned vehicle. While it may be tempting to imagine a world where recalls aren’t such a burden to dealers and customers, the fact is, recalls are here to stay.

Consider these facts:

1. The reason it takes so long to get an airbag to replace those recalled Takata units is that suppliers simply do not have enough capacity to deliver. Takata was (and still is) the primary supplier and manufacturer of airbags in the United States. One main reason for slow parts fulfillment is that Takata continues to manufacture airbags as replacements for recall repairs and still provides airbags to manufacturers in order to build new vehicles. True, these faulty airbags are still being put into brand new vehicles. The logic being that the process provides the industry a couple of years to handle the congested situation because these airbags are reportedly “safe,” for at least 2-3 years.
   
   As a result, approximately three years from now, almost every new vehicle currently being sold will need airbag replacement. At this time, dealers will very likely still be in the process of repairing the airbags from the current Takata recall and will be hit with a whole new wave of 3+ year old vehicles needing airbags. Airbag recall repair will be part of our lives for many years – perhaps a decade – to come.
    
2. The rising popularity of electric vehicles, combined with state and Federal environmental initiatives, has manufacturers racing to produce more of these types of vehicles. As electric vehicles were such a small market segment in the past, many of these EVs have not yet seen production on a mass scale. However, as production ramps up in the near future, the scale of mass production is likely to cause errors. As this new technology pours off assembly lines and into consumer driveways, it’s very possible that problems will appear that nobody anticipated. This could easily lead to recalls requiring technicians with expertise that they do not have, further adding to the problems of overloaded service departments.
    
3. Self-driving cars. Is it even possible to predict what problems these vehicles may have once they hit the roads in volume? Consider the combination of human drivers and self-driving vehicles! Technology is fickle and there are so many integrated technologies in a self-driving vehicle that recalls are pretty much inevitable. The earliest versions of these vehicles are due to hit the consumer within the next two years, with sales expected to soar in markets where commercial application is anticipated. Given the enormous savings the commercial market is expected to realize with self-driving vehicles, analysts predict brisk sales early in the release of these vehicles.
    
4. Due to various factors, including the recent explosion of leased certified pre-owned (CPO) vehicles and increased used car sales, more vehicles are on the road later in their lives than ever before.
   
   It is currently legal to sell used cars with open recalls, which will inevitably add future recall workload. Some of these leased CPO vehicles are for very low-mileage vehicles, such as former service loaners, demos, etc. While these vehicles may have had open recalls when new, preventing dealers from selling them without first fixing the recall, taking the vehicle in as a demo or loaner and putting a few thousand miles on it makes it a used car which can be sold or leased with an open recall. Which of course means future recall work.

These are just some examples of why there will always be recalls. I’m not referring to the continued existence of recalls in general. I’m simply stating that recalls will continue to be a large problem in the coming years. For this reason it is important to understand that this HUGE amount of work, along with the frustrating process of getting parts in stock and dealing with a constant flow of irritated and upset consumers, is not going to decrease any time soon.

If your dealership has not already reengineered itself to manage recalls, then the observations I’ve outlined above should provide a strong case for why life with recalls is going to be the norm, rather than the exception. For many, this isn’t good news. For some, the conditions represent a unique opportunity to win in the marketplace. We’ll discuss how to use the recall crisis to your dealership’s benefit in future blogs.

There are many more facts that would have made this blog too long. So, in Part 2 of this blog, I’ll outline more reasons why recalls are here to stay.

As we make our New Year’s resolutions and reflect on 2016, which was a less than perfect year for our industry, filled with recalls and declining consumer confidence due to lack of parts availability to quickly fix these recalls, I thought it may be a good time to look ahead to 2017. In that spirit, I’d like to offer some simple tips that can help improve the service experience and ease any fears in dealing with recall customers.

Simply stated, compelling data suggests that there are plenty of residual benefits for those dealerships that handle recalls efficiently and with an exceptional level of service throughout the process.

Automotive recalls present an opportunity to maintain and improve dealer and brand integrity while winning back lost customers and attracting new customers that typically do not service at a factory-certified dealer. Historically, however, recalled vehicle owners have been viewed as a nuisance by dealership personnel. These consumers can, at times, be frustrated and emotionally volatile; too demanding and suspicious of the dealership’s intent. The perception in most dealerships is that these customers are unwilling to spend money on additional repairs identified through a multi-point inspection and that they’ll leave negative responses on CSI surveys, even when they were treated well by the dealership. There’s no mistaking – these consumer are, perhaps, annoyed by the inconvenience of the recall in the first place, but it would be a huge mistake to avoid these customers altogether or to move them through their store as quickly as possible without disrupting normal operations or where they may taint the perception of, otherwise, happy customers.

Before your dealership decides to give up on recalls, be informed of what is at stake.  Many of these customers desperately need their vehicle to be in good working order. These vehicles are often their lifelines -- they get them to work, shuttle their kids to school and run all of the various errands necessary to provide for their families. When unexpectedly confronted with a major disruption in their lives, such as an inoperable, or perhaps dangerously unsafe vehicle, it can easily trigger unwanted emotions that can then be taken out on you, the dealer.

However, while these customers may begin a relationship with you in a controversial and emotional manner, if handled properly, they can very easily become some of most loyal and profitable customers. You see, they are looking for help because they desperately need their vehicle repaired.  And, if they don’t get help from you, they’ll get help from your competitor.  That single interaction with a competitor could forever cost you that customer.  The dealerships who step up to better manage these weary customers, not only win more new customers, but also win back lost customers and gain a legion of loyal followers who will serve as brand advocates to a larger population of consumers who seek a referral to a reputable dealer.  There’s a lot at stake here.  It’s more than recalls and the key to winning their trust and, ultimately, their business, lies in handling them properly.

Here are a few tips:

Training: Recall customers can be a little more emotional than your average customer. Many have been inconvenienced, are irritated, upset and even scared. So, naturally, they need a little more hand holding. And that usually requires a little training. But it is well worth educating service personnel, BDC reps, salespeople, and even the receptionist on how to properly handle any recall customer communications – be they by phone, email or in person. It is the very first step in transforming the customer experience of a recall customer. I understand parts availability presents a problem and prevents many dealers from being able to service these customers quickly. However, the bottom line is that these consumers don’t care to hear about all the reasons WHY you can’t help. They’re frustrated and want their vehicles fixed now. Training your staff in how to be empathetic when handling these customers is an important part in helping to calm the customer and ease their concerns. It’s not enough to simply tell the customer that the parts aren’t available. Staff should be apologetic to customers and, if the dealership has the resources, do everything they can to assist the customer based on the danger presented by the recall. All it takes is one negatively perceived interaction to potentially lose a customer.

Consistency: Make a commitment to consistently check all vehicles – whether inventory or service vehicles – for open recalls. Service advisors should check every vehicle that comes into the service drive for open recalls and have real-time updated information so they can do a thorough job. This simple process can increase repair orders but, more importantly, safeguard your customers from unknowingly driving around in an unsafe vehicle.

Efficiency – Analyze service drive processes and shop capacity and you would be surprised at how simple it can be to spot ways to increase efficiency through small process changes that enable you to service more vehicles with existing resources. Efficient scheduling is like a game of Tetris. Find just the right spot for the next block headed towards your dealership so that they all fit together perfectly. The ability to project anticipated repairs through strategic scheduling can result in a higher volume of vehicles fixed more efficiently and, by default, increase service revenue.

The proper handling of recalls will save your CSI by providing exemplary service and recall consultation. It will also quickly pay dividends through increased customer pay revenue from repair upsells and vehicle sales from service. Recall customers are a wonderful source of additional service revenue AND vehicle sales – if handled correctly.

Rolling out the red carpet for these consumers can greatly increase your penetration in your local market and win valuable customers for life.

In a past blog, I discussed how AutoNation instituted a policy to not wholesale or retail any vehicles with open recalls until they were repaired. Sadly, as recently reported by Automotive News, AutoNation’s efforts have met with tough consequences, including 6,000 grounded vehicles with “no parts in sight,” according to AutoNation CEO Mike Jackson. Jackson feels future legislation making it illegal to sell a used car with an open recall, as already exists for new vehicles, will be unlikely due to an incoming pro-business administration.

AutoNation’s decision to sell pre-owned vehicles with open recalls could not have been made easily. I certainly empathize with AutoNation being in a position where their dealers are unable to compete with the marketplace. AutoNation continues to maintain a position of full disclosure whether the vehicle is retailed or wholesaled. Jackson’s position is that, when AutoNation sells the vehicle, the consumer will be made aware that the recall exists.

Regardless of your position on this issue, it is also important to be aware that, just because it’s legal, selling pre-owned vehicles with open recalls doesn’t mean that your dealership is safe from a lawsuit stemming from product liability. Consider legislation enacted where bartenders can be held liable for serving alcohol to an intoxicated patron if that patron then leaves and hurts themselves, such as in a car accident. Many states already have such legislation and, one could argue, it could easily be applied to a situation where a dealership sells a used car with knowledge of an open recall and the customer is injured or dies after purchasing it. There are multiple examples where legally selling a defective product can also lead to a party being held liable for subsequent damages to an unsuspecting consumer. The challenge revolved around whether a jury would interpret the action as negligent. Given the ability for a dealership to easily and quickly determine whether a pre-owned vehicle had an open recall or not, it’s no secret that consumer agencies and personal injury attorneys are licking their chops.

As covered in a recent Automotive News article, Rosemary Shahan, president of Consumers for Automobile Safety and Reliability, feels strongly that dealers could still face liability regardless of a federal ban. She stated that, “Dealers forget there’s a whole body of state law, and it is illegal for a dealer to sell an unsafe product, period, whether it’s under recall or not.”

The legality of selling pre-owned vehicles with open recalls is currently being debated amongst federal and state legislators. If history serves as a roadmap to future legislation, my belief is that the industry would be wise to prepare. It’s only going to be a matter of time. If the Trump Administration doesn’t move swiftly on expanding the law, certainly foreign governments will.  More importantly, insurance companies that underwrite dealership policies will act decisively to mandate a more restrictive stance. Laws that protect the consumer usually win out in time, as evident in the Safe Car Rental Act that was enacted earlier this year, requiring rental car agencies to remove from their fleets any vehicle with an open recall or face severe penalties.  The wheels are already in motion and the momentum seemingly impossible to stop.

Whatever the future holds for legislation, it would be wise to take a new look at the policies you have in place when it comes to selling vehicles with open recalls. Even if your dealership has no concern for customer safety (which we would certainly hope is not the case), the mitigation of risk for your dealership should be top of mind.

Consumer and public safety will always take precedence over profit in the eyes of a sympathetic jury. Any state-level liability concerns, of course, varies by state. But as a minimum, consider the fact that federal law doesn’t prohibit dealerships from selling pre-owned vehicles with open recalls doesn’t mean you are in the clear.

Recalls are such a pressing issue and there is enough confusion out there already with all the media reports and hype. Many consumers are already in a state of electrification. While personally I believe that no vehicle should be sold with open recalls, I realize the huge challenge this presents. At the very least your dealership should ensure that recalls are fully disclosed and make a strong attempt to ensure the consumer knows this before leaving your lot.

While not in a position to offer legal advice, I would suggest that every dealership pursue the necessary recall management protocol in order to mitigate these types of legal liabilities.  We are in a litigious society and it’s imperative that your dealership take all measures necessary to reduce risk.  At the end of the day, dealerships will likely be held accountable as “experts” in a vehicle sales transaction by a judge or jury.  Again, effective management of recalls is not only the right thing to do, but the smartest.

While it is still legal to sell pre-owned vehicles with open recalls, the National Highway & Transportation Safety Administration has advocated that these vehicles not be sold -- Similar to how it is illegal for auto dealers to sell new cars, or for any rental car agency to rent vehicles with open recalls. The issue is still being debated, yet, at the moment, pre-owned cars with open recalls still remain eligible for sale.

Even the government has internal problems handling recalls. According to a letter written by three members of the House of Representatives to General Services Administration (GSA) Administrator, Denise Turner Roth, despite the fact that the GSA has a system which notifies them of open recalls for government vehicles in use, the agency continues to sell these vehicles at auction.

Instead of revealing any open recalls to a potential buyer, apparently, the GSA absolves itself of liability through a general disclaimer. While the GSA will pull these vehicles out of service when notified of an open recall and not allow their employees to drive them, they still dispose of them through auctions -- in essence implying that while the vehicle is unsafe for government employee use, they willing to pass the risk on to any subsequent buyer or owner.

Most consumers would probably assume that government agencies would refuse to sell these vehicles without first fixing all recalls – so as to maintain a consistent front with the NHTSA stance that these vehicles are dangerous and should not be sold.

My best guess is that the GSA is simply doing the job it is tasked with – namely disposing of government property that is no longer in use so as to recover some of its investment. The internal policies that cause this practice to continue could easily be rectified – without the need to pass any legislation. While the NHTSA is pushing for this standard to become law, the government agencies themselves could choose to implement their own policies internally and refuse to sell these vehicles, effectively protecting the American consumer from dangerous vehicles owned by its government.

American consumers generally hold the Federal government to a higher standard. They expect that the government would look out for the safety of its constituents by ensuring a cessation of sales of any dangerous vehicles. Available technology makes it easy to check recall information and it is no longer an arduous chore.

Recalls are such a pressing issue and there is enough confusion out there already with all the media reports and hype. Many consumers are already in a state of electrification. I feel it is important that government agencies offer a united front to consumers and should be on the same page. I sincerely hope the GSA takes heed of the NHTSA’s advice and discontinues this practice. It is important to put consumer’s minds at rest and to ensure that no lives are at risk due to vehicles purchased from the government with any open recall.