One dealer in Florida is taking a stand to ensure that pre-owned vehicles with open recalls never hit the streets. When the Takata airbag crisis first reared its ugly head, Earl Stewart of Earl Stewart Toyota, started informing customers of in-stock vehicles with open recalls by clearly marking them with signs, while still continuing to sell them.

In June of this year, Stewart did an interview with CBS News and it really hit a nerve when, in questioning him about defective airbags, the reporter asked, “How are you going to feel if one does explode in a car that someone bought from you here, even with disclosure, and they are severely injured or killed?” Stewart’s response was “How would I feel? I would feel absolutely terrible.” According to the story, Stewart decided to stop selling all vehicles with open recalls.

But he didn’t stop there.

According to Automotive News, Stewart wrote a letter to Florida Governor Rick Scott, the state’s House of Representatives and Senate. In addition, he started a petition on change.org in an attempt to make selling pre-owned cars with open recalls illegal. Stewart now uses his “consumer-first” stance as a competitive advantage and aggressively markets his dealership’s policy of not selling any vehicles with open recalls. He has a special page on his website informing customers of this policy and solicits consumers to sign his petition.

“All I care about is to stop the practice of selling these cars. Put them in the same category that you do with new cars. There’s no logical rationale whatsoever that you should not be able to sell a new car with a defective airbag, but you can sell that same car used. It’s even illegal to rent a car with a defective airbag,” said Stewart.

According to Stewart, his passion for this cause has been costly. He still needs to sell cars and still accepts vehicles with Takata airbag recalls as trades. His decision not to sell them has cost him more than $110,000 in storage and depreciation. At the same time that Stewart sides with consumer safety, his competitors continue to sell pre-owned vehicles with open recalls and, in his mind, have placed his dealership at a competitive disadvantage.

Figuratively painted into a corner, Stewart decided to sue his competitor.

With an unsaid fellowship amongst automotive dealers, many question Stewart’s motivation.  His position is that competitors are misleading consumers, disguising the fact that an open recall exists or the ease with which it can be fixed. Because Stewart felt so strongly that the competing dealership and/or its employees were intentionally withholding important information and, in some cases, egregiously misrepresenting the vehicles, Stewart sued his competitor under Florida’s Deceptive and Unfair Trade Practices Act.

It’s pretty rare to see dealers sue each other – especially when the recipient of the suit isn’t doing anything illegal and is, in fact, mirroring policies most other dealerships in the country exercise. It’s no secret – dealerships continue to sell pre-owned vehicles with open recalls. While a growing number of dealers are adopting similar policies against the sale of pre-owned vehicles with open recalls, Stewart’s decision to sue a fellow dealer clearly pins one camp against another. Whatever your position, one item remains true – selling pre-owned vehicles with open recalls is not in the best interest of the consumer. Internally, dealers must debate whether the benefits consumer safety and social justice marketing outweigh the costs of moving vehicle inventory. 

I sure as heck am not going to challenge or validate Stewart’s decision to sue another dealer, as that is not the point of this blog. What I love about this dealer is his commitment to consumer safety and to leveraging it as a market differentiator – smart guy. I certainly feel it gives him a unique selling proposition and competitive advantage in a market where consumers have valid questions about vehicle safety…. And then this happened …

Just as I was wrapping up this blog, an update on this situation appeared in Automotive News. Apparently, the dealer that was sued had a change of heart soon after the lawsuit was filed and adopted a policy not to sell the vehicles anymore. According to the article, his decision had nothing to do with the lawsuit. The motivating factor was that same question that CBS News asked Stewart during a segment in June -- how he would feel if someone was killed in a car he sold. The dealer considered the same question before ceasing the sale of used inventory subject to the Takata recall.

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. 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, I sincerely hope consumers reward these two dealerships for their good deeds. Sometimes, doing the right thing, while challenging at first, pays off in the long run.

Think about the value propositions most dealerships present to consumers. Free car washes, fast transactions, oil changes, low prices, etc. They’re all so similar that, in reality, they cease to differentiate one dealer from another. The simple fact that they aren’t unique just about negates the offer for consumers when they consider who to buy from.

Nobody cares which Wal-Mart to shop at because they all have the same value proposition, low prices. So what kind of value proposition could a dealership come up with that would help dominate the market over their competition?

The answer may surprise you.  With today’s recall crisis being top-of-mind with consumers, how about guaranteeing that every car you sell is recall free? AutoNation recently implemented just such a policy and has been met with both media and consumer applause.

The reality is that nearly 1 in 5 vehicles on the road today has an open recall. And it gets worse – most drivers aren’t even aware that their vehicle has an open recall, and in many cases, if they are aware, the dealership doesn’t have the parts to fix it.

However, I can guarantee you that any customer going into a dealership – whether it’s a franchised dealer or an independent – is expecting to get a vehicle that’s been inspected, runs well and has no recalls. Therefore, the lack of any recall is just as compelling a selling feature as a vehicle warranty, for example.

Customers want peace of mind when buying a new or pre-owned vehicle. If you sell a vehicle with an open recall which the customer then immediately has to take into an authorized dealer service center to get fixed, the customer can feel as if they have been sold a defective product. This will increase the likelihood that they are unhappy with their purchase.

Some dealerships have chosen to ensure that customers are aware of any open recalls at the time of purchase -- but is that adequate? If you go to the grocery store and buy a dozen eggs. Then find at the checkout counter that two are broken and the cashier tells you that you need to come back next week to replace the two broken ones, chances are good that you won’t purchase the eggs or, at the very least, that you won’t be happy with your experience and will defect to a competing store for your future purchases. Sounds a little ridiculous in this example, right? But think about it. The customer EXPERIENCE is not that different at that grocery store to what happens when you sell a vehicle with an open recall at your dealership. The customer perception of that experience and desire to do business with you in the future would be the same.  You might even argue that, due to the amount of the consumer’s financial investment, the quality standards for a vehicle are substantially higher than that of a dozen eggs.

The “No Recall Guarantee” isn’t an easy guarantee to offer. It involves paying attention to each vehicle on a regular basis while in inventory, not just when you dealership first acquires it. The vehicle could have no open recalls when you first acquire it, but perhaps one is issued while in your inventory.

There are many times when you should check for recalls. For instance, in my last blog, I talked about the importance of checking for recalls at auction so as not to purchase any vehicles with open recalls, which helps decrease the number of units in inventory with open recalls.

It takes some work and a steadfast commitment to a reliable and accurate solution. However, the most valuable unique selling proposition any dealership can offer its customers is full confidence that any vehicle they purchase and drive away in is safe. To do that, you have to ensure that none of the vehicles in your inventory have open recalls.

Consumers are bombarded daily with news about new recalls. This is top-of-mind for them and a matter of huge concern. Consider implementing a no recall policy and telling your customers of this policy through all your marketing and by physically labeling your vehicles as such. You should find that this helps instill trust and confidence in your dealership while also increasing the value of the vehicle in the minds of your customers. This product confidence not only leads to increased profits, but also builds loyal and happier customers.

Embrace this policy and you could very easily find that your value proposition controls your market… and makes all of your competitors inferior when it comes to consumer choice.

The Discovery Channel’s “Shark Week” has become a cultural phenomenon in our country. Sharks are relatively mysterious and most people don’t know much about them. Cars are very similar in nature. We know that we need them and which ones are cool, but most people don’t really know how they work. And not only that, as one in six vehicles on the road has open recalls unrepaired, these vehicles can present even more of a danger to other drivers than sharks ever could -- and nobody would know… until the car bites.

Legislative bodies and government regulators are concerned about the percentage of vehicles with open recalls that remain unrepaired. As a result, it is illegal to sell any new vehicle with an open recall. This has placed a large burden on manufacturers and dealers as they are now forced to sit on inventory which cannot be sold because the parts to fix the recalls aren’t available.

If you consider the huge plague of recalled vehicles, it’s not that much of a stretch to anticipate that regulators will soon extend this “do not sell” rule to pre-owned vehicles. It certainly seems logical. In order to increase the percentage of recall repair compliance, our industry simply cannot allow ANY vehicles – pre-owned or new – to be sold with any open recalls. That should help increase compliance.

A major channel for dealer vehicle acquisition and inventory replenishment is auto auctions. Most used car managers spend a lot of time researching the vehicles, running vehicle history reports and, in many cases, physically inspecting the vehicles prior to bidding on them. The one component that’s missing – but should be top of mind – is whether the vehicle has any open recalls. You have to admit that a vehicle with a clean vehicle history report AND no open recalls is premium front-line material.

However, what happens when you get a clean history report but there are open recalls? One choice is to sell the vehicle and educate the buyer that there are open recalls on the vehicle. This is certain to create doubt in their mind and make them less confident in their purchase. The other option is to fix (or have fixed) any open recalls that exist prior to selling the vehicle. And the third, and perhaps best option, is to ensure that any vehicles acquired have NO open recalls prior to purchasing them in the first place.

Nobody knows when the hammer will drop. While you may be sitting back saying “it’s not against the law to sell a pre-owned vehicle with an open recall,” there are plenty of lawsuits pending at present time where consumers are suing the manufacturer AND the dealership for injuries resulting from an accident involving an open recall. Major auto groups including AutoNation recognize the liability inherent in selling these vehicles. NOT selling them and guaranteeing customers that 100% of their inventory is recall free provides them with a competitive advantage in a marketplace where consumers are bombarded with news about dangerous recalls.

Consider making it a practice in your dealership to ensure that any vehicle acquisitions via auctions do not have any open recalls. You’ll save yourself the headache of fixing them, the wallet-ache of sitting on them waiting to be fixed, and the danger of liability should something happen to the customer. As a result, your dealership should be positioned to further customer trust and your livelihood safeguarded from potential catastrophe.

In my past few blogs, I discussed the various areas in a dealership that are affected by the current recall epidemic, compared the differing viewpoints about recall repairs from dealers and consumers, discussed non-compliance in recall repairs on new and pre-owned cars and how that could open liability concerns for dealers. I also covered how vehicles in your service drive need your attention and that ensuring customers leave in safe cars can lead to increased loyalty and service revenue.

Hopefully, these policies and suggestions have been of some help as no vehicle should leave your lot with an open recall. All repairs should either be completed or scheduled, regardless of if those vehicles come through sales or service.

Currently, hundreds of millions of drivers are affected by recalls and vehicle safety is of prime concern to your customers. It’s rare for a day to pass without news of a new or expanded recall as manufacturers rush to identify any potential issues and seek to fix them.

It makes sense, is a smart public service and sound marketing strategy to ensure that no sales or service customer leaves with a vehicle that has an open recall.

There’s no doubt in my mind that if your dealership has gone through the extra effort to ensure that customer’s leave with safe vehicles and peace of mind, you will be rewarded in a number of ways. Chances are good that your efforts will prove fruitful in terms of additional traffic and sales, as well as new customers pulling into your service drive.

But only if you tell them!

Use this initiative as your unique selling proposition. It’s much more powerful than free car washes or oil changes. And now is the time to get ahead of the competition – I’ll bet that, as of right now, not too many of your competitors are making these efforts.

If you’ve already proven to your customers that you care about their safety, your customers will trust you more and that is the first step towards earning their loyalty. Trust is a huge factor with today’s customers in both sales and service – it certainly leads to increased acceptance of recommended services through your service drive.

So, climb up on top of that mountaintop and shout your efforts to everyone. Include messaging on every marketing piece, every television ad, every radio ad, your website, store signage and your website. Tag the cars on your lot with this message so that shoppers see that you take extra effort to ensure all your cars are safe. And be sure to inform your service customers during the consultation part of the service drive experience that you do this for them.

Don’t be shy. You’re doing your customers a service and also doing your part to make the roads safer for everyone. This naturally leads to increased business. And that’s a win-win for everyone.

In my last few blogs, I’ve discussed how to handle recall customers and why dealers should embrace them rather than be afraid of them. We’ve also reviewed new and used car recalls, along with the applicable laws and consequences for any failure to comply. The one area I haven’t yet discussed is recalls in your service drive. Sure, you have customers who know they have a recall and come into your service department to get the work done. But what about that customer who is completely unaware that their vehicle has an outstanding recall -- that customer that just comes in for an oil change, completely oblivious that anything is wrong with their vehicle?

The problem is that, statistically, there are many vehicles with open recalls that pass through your service drive with vehicle owners completely unaware that any recall exists. What happens with these customers and their vehicles? In many cases, they simply get the service they came for and leave with that recall unfixed. The question is, why? I’m pretty sure that no customer would be happy to leave your service department only to discover they have an open recall and you failed to inform them about it.

Checking for recalls in your service lane, especially with off-brand vehicles, is typically a manual process. It can be time consuming and, in many cases, the advisors don’t have the tools or resources at their disposal to efficiently research the recall. So they don’t.

Service departments are designed to keep customer vehicles operating safely and at maximum efficiency. That’s why dealerships do inspections. And it is certainly why additional services are recommended. Well, here’s the deal: A huge piece of providing value to a customer in the service drive should include checking each vehicle for open recalls -- every time they visit your service drive.

Sure, you may find an open recall for which you don’t have available parts. You may not have the shop capacity to complete the repair, even if you do have the parts. The customer may be inconvenienced and you might even lose some service upsells because the customer isn’t willing to wait. However, the bottom line is that you’re providing your customer with valuable information, making the roads safer for all drivers and are doing your part to increase recall repair compliance.

Yes, I do know that you are running a business operation and it is important to be profitable. Well, customers appreciate good honest decent customer service and a great customer experience. In turn, they are willing to give their loyalty and future business to you. Treat them right and show that you are concerned about their safety and they’ll come back to your service department.

Customer loyalty. Community service. Increased revenue. Sounds like a winning strategy to me.

There’s no question – the recall crisis is eroding the confidence consumers have in vehicle safety. Every day, we hear of more vehicles being recalled for various reasons. If nothing else were to get recalled, we’d be looking at an “estimated” completion date of around 2020. That’s assuming the parts to fix the recalls aren’t themselves recalled -- as was the case when TRW stepped in to manufacture airbags to replace the faulty Takata ones. Dealerships are getting swamped with recall work and are currently unable to handle the shop capacity. Consumer confidence is low, and only going to get lower if our industry doesn’t take steps now to fix these issues. But what’s being done about it?

According to the Federal Motor Vehicle Safety Act, it is illegal to sell a new car with an open recall on it. However, just last week the NHTSA settled with an Arizona car dealership that sold two new cars with open recalls two years ago. The fine? $40,000. This could be precedent setting and an indication of heavy fines in the future for selling vehicles with open recalls. Heck, if the fine for calling someone on the “Do Not Call” list is $10,000 per incident, I could easily see the fine for selling a new car with an open recall being set at $20,000-- or even more!

While many dealers do follow best practices and wouldn’t intentionally sell a new car with an open recall, think about how easy it could be to do so accidentally. That unit which sat on your lot for a while, that hasn’t been looked at by service since it was PDI’d three months ago, finally gets sold and driven off the lot. It’s very easy to see a situation where there was an open recall for that car that came into effect between the dealership receiving it and selling it. I’ve yet to hear of a “Does this vehicle have any open recalls?” checkbox on a dealer’s delivery checklist. Perhaps it would be wise to include a measure similar to this, as $20,000 per incident could get expensive.

Manufacturers are now stepping in with stop sales on some models, which bar dealers from selling these vehicles (which is good). Many times in the past, manufacturers have stepped in to assist dealers when liability issues have arisen and lawsuits filed. Now, manufacturers are seeking to remove themselves from liability and basically telling dealers that, if they sell the cars, they will have to face any consequences on their own.

Dealers, on the other hand, can’t simply sit on inventory indefinitely. For their used vehicles, some dealers have taken to asking customers to sign waivers that release the dealership from any open recalls. They may need to start doing something similar with new cars as well -- unless they run a recall report on the new vehicle immediately prior to delivery.

And, while all of the above chaos is going on, in order to continue to be profitable, manufacturers still need to manufacture new vehicles. Dealerships need to get those cars from the manufacturers so they have something to sell. How does all of this happen with a lack of parts availability and scarce airbag inventory? Some manufacturers, with regulator’s blessings, continue to install Takata airbags in new vehicles – yes, the ones rolling off the assembly lines right now. While they realize that these very same vehicles will need to be recalled in the next five years to have those airbags replaced, the justification is that it is a temporary measure, due to a shortage of replacement parts. Five years from now, replacement airbags will be available and the problem alleviated.   

If the extent recalls are already a problem for the automotive industry is not obvious to all parties concerned, it will soon become even more so, and something that will be impossible to ignore.

How do we, as an industry, work together to ensure that the vehicles we make, sell and send our customers out on the roads with – the same exact cars that we drive with our families – are safe? The solution won’t be easy. Before we can ever fix this, it will take effort, innovation and a true commitment to solving this problem from everyone in our industry.

In Part 1 of this series, I detailed the existing dealership viewpoint when it comes to consumers and the obstacles dealers are facing as related to the massive influx of recall business. In this blog, I’ll share the consumer viewpoint so dealers can better understand their state of mind and why, in the end, dealers should embrace recall customers.

Consumer Viewpoint

It’s clear to us all that the average consumer has valid concerns about owning and driving a vehicle that may cause death or injury if in an accident.  Even if the issue is limited to falsifying emissions reports or replacing a part that presents no danger, the entire matter is a nuisance to the consumer.  The range of emotions run from anger about their perceived loss in vehicle value to the fear and anxiety of placing the lives of themselves and passengers in a potentially life-threatening situation to the aggravation of having to take time off of work to take their vehicle back to the dealership.  It is a sad fact that, despite the many dealers who provide an excellent customer experience, many Americans hate going into car dealerships. Some articles theorize that this is a key reason for the difficulty auto manufacturers are experiencing in recall repair compliance.

That being said, a consumer who wishes to repair their recalled vehicle with no money out of pocket and in full compliance to safety standards has no choice but to visit a franchised dealership for factory-authorized repairs. As with Takata, due to the limited supply of replacement airbags, many consumers are forced to wait as long as 6 months for replacement parts to be available. This forces the consumer to make an impossible choice: continue to drive an unsafe vehicle or stop driving the vehicle until it is repaired.

For many, a vehicle is necessary to get to work, pick up children from school, get back and forth to doctor appointment, etc.  And, without alternative transportation, the consumer simply has no choice but to drive the vehicle despite its potential danger. In addition, car payments aren’t suspended when the vehicle is not in operation. While loaner vehicles are an option, most dealerships don’t have the resources to provide a replacement vehicle for the large volume of consumers who are awaiting repairs for an extended period of time. As expected, these consumers face a frustrating and daunting set of circumstances with little good news for the foreseeable future.

It’s not difficult to see that dealers are encountering consumers who are already on edge by the time they come into the dealership for those recall repairs. Without a doubt, every consumer interaction could lead to additional revenue from vehicle sales or additional repairs necessary for safe and optimal vehicle operation. However, while the situation is a tinderbox, it’s in the dealer’s best interest to tread lightly, respecting the sensitivity of the situation.  After all, the dealership is perceived as an agent of the OEM. In their eyes, you’re the cause of this anxiety.  In truth, dealerships aren’t responsible for these recalls, but they definitely are the sounding board for the consumer’s frustration. What seems like an obvious tinderbox to most can also be overlooked by dealership staff focused solely on a sales opportunity. While, in some instances, a vehicle sale may be in the consumer’s best interest, it’s easy to understand that some consumers may characterize the dealership as opportunists and be offended by being approached by the sales team without employing proper sensitivity.  I’m not suggesting that these consumers won’t buy a car…  I’m just suggesting that care be taken as far as the time and approach to solidifying customer relationships. That it should be handled in such a way that the customer is more inclined to entertain the idea of a vehicle purchase from the sales staff, especially if positioned as in the customer’s best interest. 

Bottom Line

At first glance, the clash of these two perspectives places the consumer and the dealership at odds. That line of thinking is not only counterproductive to the effort; it couldn’t be further from the truth once the value of customer relationships is factored.  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.

The fact is, vehicle safety should be at the top of the priority list for manufacturers, dealerships and consumers.  Safer highways benefit everyone in the automotive community.  And, while the obstacles and limitations are not to be viewed lightly, it’s clear that dealerships will need to shoulder the responsibility of cleaning up the mess alongside consumers and manufacturers.  Assigning blame to any one entity provides no remedy to the consumer.  This is a unique opportunity for dealerships to assume the role of consumer advocate, righting a wrong that ultimately serves some common goals and solidifies a future relationship. 

One day, that same recall consumer will be in the market for a new or pre-owned vehicle or turn to social media to inform their friends and family about how they were treated at your dealership – you don’t want to be on the wrong end of that conversation.  Whether or not additional service and sales revenue materialize from a focused recall management initiative, helping consumers navigate the path to vehicle safety is our collective responsibility.  Let’s arm ourselves for the recall revolution taking shape.  Some dealerships will rise to the challenge while others would rather abandon it.  For those of us that accept a responsible role in the automotive industry, the hard work yields long term opportunity.  Recalls aren’t going away any time soon, so, for those that recognize the importance of building long-term market share through conquest business, doing the right thing by consumers also bears fruit.

The subject of recalls has provided plenty of fodder for some in the media. Certainly, vehicle recalls are an explosive issue that places dealerships on the front lines of consumer anger and frustration. At the same time, dealers are also positioned to resolve the situation, restoring the consumer’s confidence in the brand and solidifying or commencing relationships.  Admittedly, at Recall Masters, we’ve touted the success of using the recall effort as a means of driving sales and service revenue. Without a doubt, a documented boost in revenue is quite the enticement for dealerships to build an effective recall department.  But, at the risk of appearing opportunistic at the expense of the consumer’s misfortune, we advise that dealers focus on vehicle safety, customer service and doing what is in the best interest of the customer.  As such, in turns out that “doing the right thing” can also yield opportunity for the dealership, but only if approached properly. 

There are always multiple perspectives when it comes to events that affect millions of people with far-reaching implications. The recent Takata airbag recall presents especially difficult problems due to the nature of the potential danger to the consumer, the limited availability of replacement parts and the sheer numbers of vehicles affected. The resulting situation is problematic for dealerships and OEMs and extremely frustrating for consumers, government entities and consumer advocates. In a situation like this, there are no clear winners and it’s understandable that dealerships would rather avoid the whole situation to begin with.  However, in side-stepping a sensitive environment, as well as a role as a solutions provider, the dealership also surrenders the customer to a competing dealership.  Again, the consumer has a potentially life-threatening situation on their hands – they have no choice but to find a solution.

We should all be concerned about taking unsafe vehicles off the road and placing customers first.  In so doing, there’s no extra emphasis on driving revenue through recalls, as, it turns out, sales and service revenue is a natural subset of helping the customer, along with a boost in dealer CSI, renewed loyalty in the brand and relationships that are built on resolving a difficult customer situation.  The true test of a relationship is how difficult situations are handled.  And, given the enormity of these recalls, these situations would certainly be characterized as difficult. 

I encourage all dealers to invest in reaching affected vehicle owners in their primary service area and to communicate in such a way as to compel them to come into the dealership for the necessary recall repairs.  Communicating recall information to consumers is a delicate matter, as fear and disappointment are elevated for the consumer.  The dealer is then either a savior or a bearer of bad news. 

Dealership Viewpoint

In much the same manner that consumers find themselves subject to the misfortune of a recall, so does the dealership. The OEM brand’s integrity is under assault, and with it, so goes your dealership’s brand.  Now is the time to preserve and protect the attributes of the name that carried your dealership for decades.  What you’ve accomplished historically brings little comfort to the consumer who now faces a vehicle recall.  At that moment, you are one of “them” – the origin of the frustration, anxiety and now, the waste of time. 

The challenge of overcoming the debacle of a vehicle recall now falls at the dealer’s doorstep.  Still, for dealerships that are optimized for customer service, there’s no cause for alarm. This is a moment to shine. Consumers that are already at their wit’s end with annoyance and paralyzed with fear about what’s at stake with their next commute, are now looking at you as either savior or scapegoat. As previously mentioned, recall traffic in your service drive can also translate into a revenue opportunity, but the potential capacity requires that your dealership make necessary modification in both the sales and service departments.  Consumers subject to recalled vehicles are very unique and need a custom approach to problem-solving.  

The fact remains that, if not for a recall that requires repair intervention from the dealership, most consumers would prefer NOT to be in the dealership’s service drive. I do not intend to offend.  I am simply stating a fact that should not be news to dealerships. For years, customers have been migrating to independent repair shops for ongoing vehicle maintenance, a point of frustration for the dealer’s customer retention effort.  Recalls present a tremendous opportunity to generate consumer touch points that would otherwise never have happened.  If handled properly, these consumers will migrate to regular customers who will service with the dealer regularly and consider the dealership when in the market for a new or pre-owned vehicle.  These are the essential building blocks to customer lifecycle management. 

As dealers look to evolve from purveyors of a commoditized product to the consumer’s trusted advisor for vehicle sales and service, the relationships begin humbly through recall management.  Those dealers that do right by the customer, not only put them in a position for increased sales and service revenue, but also realize more immediate benefits like a boost in dealer CSI and the chance to reframe the consumer’s perception of the dealership experience.  It’s not only the right thing to do, but the smartest.  Does revenue emerge from recalls?  Yes, but only when you treat the customer with respect and empathy for the plight that they face as a result.  If dealers approach recalls with only revenue in mind, it becomes apparent to the consumer and further inflames their frustration and annoyance.  There should be no intent to be a profiteer from the misfortunate. 

One of the key pillars to recall management is the creation of a Recall Department, which begins with best practices training This ensures recall campaign success, provides best practices tools and processes and properly prepares the dealer staff on how to win customers for life, with the side benefits of making the roads safer for all drivers, generating new sales and service revenue and boosting in dealer CSI.  Once the dealership has completed training, has properly trained technicians on recall repairs and ordered the necessary parts, they’ll also need to consider the potential recall volume and how it may impact operations. 

However, the elephant in the room remains that, in the case of the Takata airbag recall, there is a huge lack of parts availability. With upwards of 85 million vehicles that may be affected by this recall, there’s no mistaking that most consumers will have to wait.  Despite a dealer’s well-intended measures to assist consumers with recalls, there is no immediate fix if replacement parts are not available.  Still, owners cannot continue to drive a recalled vehicle which could kill or hurt them. Because of this many manufacturers, such as Honda and BMW, are directing dealers to confiscate vehicles subject to recall and sending customers home with a loaner or rental car. 

According to an article in Automotive News, these manufacturers are telling dealers that the factory indemnification of the dealership will not apply if vehicles subject to recall leave the dealership. That’s probably news to dealers, who may not realize what the liabilities are. While some manufacturers are making allowance for loaner and rental cars, dealers are also scrambling to find space to store these recalled vehicles until the necessary parts come in.  Liability doesn’t end with the service department, it extends to vehicle sales. 

While the federal Motor Vehicle Safety Act strictly prohibits dealerships from selling new vehicles subject to a recall, the law does not prohibit a dealer from selling a pre-owned vehicle from the dealership’s inventory. Still, as any personal injury attorney can attest to, dealerships risk significant liability should death or injury come about as a result of the recall that went ignored by the dealership, whether intended or not. The legal community has yet to address the matter in a court of law, most agree that tort law would support a claim against the dealership. It is conceivable that the manufacturer’s legal counsel could contend that the dealership lost its right to seek indemnification upon ignoring the directive not to sell the recalled vehicle.  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 the 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.

In the next part of this two-part series, I’ll share the consumer viewpoint, to hopefully help you better understand their state of mind and why, in the end, dealers should embrace recall customers.

Auto Dealer Service Departments can now Access Real-Time Vehicle Recall Information During Appointment Scheduling, Vehicle Check-In and Inspection Process

CLEARWATER, FL and Laguna Hills, CA– May 16, 2016 –AutoLoop, LLC, a leading provider of auto industry marketing and customer relationship management solutions that successfully drive the Sell, Service, Repeat cycle, today announced a new partnership with Recall Masters, Inc., a leading provider of automotive recall news, data, training, and communications. Recall Masters will now be integrated into AutoLoop’s Fixed Ops Suite—the industry’s first, and only, totally integrated, end-to-end service platform. This will enable real-time recall lookup of vehicles during service appointment scheduling, as well as during the vehicle check-in and inspection process.

“Since the start of 2014, there have been more than 100 million vehicle recalls in the United States, just shy of half of all vehicles on the road today. Most of these affected vehicles have yet to be repaired and these open recalls represent a unique market opportunity to grow sales and service revenue, drive up each dealership’s CSI and restore the brand’s integrity in the eyes of the consumer,” said AutoLoop Chief Operating Officer Matt Rodeghero. “Recall Masters has been revolutionizing the auto dealer recall process for years and promises to be an invaluable addition to our comprehensive Fixed Ops Suite.”

The AutoLoop Fixed Ops Suite allows dealers to immediately present precise, all-inclusive quotes to customers who are scheduling online or over the phone, or who are being checked in on the service drive. And at every point along the way, the system alerts dealers to all possible profit opportunities—now including real-time recall lookup of vehicles from Recall Masters.

“Getting a customer to accept the work depends entirely on the service team having the right information at the right moment—both manufacturers and dealers realize how critical this is,” said Rodeghero. “But due to technology limitations, there were just too many service systems in use and too much invaluable data being overlooked. By bringing these systems together, AutoLoop and Recall Masters plan to help manufacturers bridge that critical gap, improving access to information by making technology truly work for the dealerships.”

As a result of another recent partnership with global technology provider Infomedia™, AutoLoop’s Fixed Ops Suite is now the most comprehensive in the industry. It delivers multiple dealer advantages, including automatically updated VIN and OEM pricing data, instant parts availability and cost, exact-price quoting and real-time RO status updates, along with many of the industry’s foremost service solutions; Book™, a 24/7 online customer scheduling system; SmartLane™, a robust, wireless check-in and walk-around tool; and Contact two-way SMS messaging.

Recall Masters is a leading provider of automotive recall news, data, training, and communications. The company is dedicated to helping automakers and their dealers expedite the repair of recalled vehicles and make the roadways safer for everyone. Greater recall awareness and proactive management helps automakers protect their brand and build trusting relationships between automotive dealers, rental car agencies, auto auctions and consumers alike.

“AutoLoop’s Fixed Ops Suite is a complete, end-to-end platform that streamlines and expedites each step of the service process. With the unprecedented level of vehicle recalls, reaching out to and informing customers of any that affect their vehicle can be a major pain point for most auto dealers. Customers don’t typically enjoy having to take their vehicle in for service in the first place. Having to stay even longer for a surprise recall repair is not exactly great for customer relations,” said Christopher Miller, President of Recall Masters. “Our relationship with AutoLoop ensures that the dealer’s customers know about any open recall in real-time while scheduling their appointment or during the check-in and inspection process, which builds trust and strengthens relationships between automotive dealers and their customers.”

To learn more about Recall Masters complete beginning-to-end solution, schedule a demo or receive a free trial call: 888-651-4480; email info@recallmasters.com; or visit: http://www.recallmasters.com. Dealers interested in finding out more about how to optimize the Sell, Service, Repeat cycle though AutoLoop’s full customer engagement suite, can call: 877-850-2010, or visit: AutoLoop.com.

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About Recall Masters:

Recall Masters is a leading provider of automotive recall news, data, training, and communications. The company is dedicated to helping automakers and their dealers expedite the repair of recalled vehicles and make the roadways safer for everyone. Greater recall awareness and proactive management helps automakers protect their brand and build trusting relationships between automotive dealers, rental car agencies, auto auctions and consumers alike.  Recall Masters is privately held and based in the San Francisco Bay Area. www.recallmasters.com  

About AutoLoop:

Since 2005, AutoLoop has helped automotive dealerships nationwide increase sales, improve client retention and achieve overall higher customer satisfaction ratings throughout the Sell, Service, Repeat cycle. With the AutoLoop Customer Engagement Suite -- an all-encompassing platform that includes everything from CRM and automated messaging to equity mining, service scheduling and more -- AutoLoop is the industry’s first and only single-vendor, end-to-end marketing and engagement solution. An Inc. 500 company with nearly 50 million names in its database and over a billion individual communications initiated, AutoLoop is passionate about being America's best customer retention partner for progressive dealerships.

One of the largest pain points with recalls is completion percentages. In many cases, it’s not by any fault of the manufacturer or dealer that the recall repair compliance percentages are low.

Recall repairs can be hindered by parts availability, procrastinating or apathetic owners, or owners who simply aren’t aware that their vehicle needs attention.

Regardless of why the percentages are low, the fact that a large percentage of vehicle owners are driving around in unsafe vehicles has captured the attention of legislators who are demanding faster progress with the threat of regulation. Manufacturers have taken extreme measures, attempting to educate and reach out to those affected, and they need dealers to assist them.

With 47 million vehicles subject to recall, the opportunity for dealerships to increase service revenue is staggering. Effectively contacting and marketing to the owners, however, can be challenging and, if not done properly, can backfire on a dealership.

Oftentimes, dealerships actively attempt to identify and solicit recall repair work by simply blasting messages to the dealership’s entire DMS. With the huge volume of recalls out there, these mass mailing can result in a poorly timed rush of customers into the service department --all at the same time. This can be detrimental to a dealership if it is unprepared to handle the influx of work. It can also be a huge waste of money if not executed properly.

Many dealerships get overly ambitious in their marketing and cannot handle the recall work that comes in. A well planned recall marketing campaign will see a 3-5% response rate (30-50 customers per month coming in for repair for every 1,000 mailers sent out). Factor this into how many customers you market to and it should help to determine how many of these customers you can service based on shop capacity, technician expertise and parts availability.

The worst thing to do is send out a mass mailer and end up with a bunch of upset customers who come in to get a recall repair completed -- only to get turned away because you either cannot handle the workload, or there are no parts available. This situation only further inflames the customer and you stand to lose their business for good.

Also, it is important to keep in mind that, as the bearer of bad news, some of these customers will be irritated, upset or fearful. How you communicate and reach out to them with the initial recall communication is just as important as how you handle them when they come to your dealership. Remember, the message you send is that something is wrong with their vehicle – it could even be unsafe to drive. Ultimately, as the face of the manufacturer, consumers will hold your dealership accountable -- especially if they purchased their vehicle from you.  So be sensitive to their emotions and ensure your communications are well designed and worded.

Reaching out to these customers in the right way is good for your dealership, the community AND your customers. Every unsafe vehicle you make safe is one less vehicle that could result in an accident – or, sadly, even death. Recall work can be a win-win: You are providing a useful service for your local community and, at the same time, getting compensated.

So, take the time to carefully think out your next recall campaign. Make sure you plan well and are set up to really service the customers you are notifying. Be apologetic, helpful and reassuring when they do call or come in. As a result your customers will be more appreciative and loyal. And that is good for business.  Make your dealership a successful recall center for the local community.