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Richard Holland

Richard Holland Managing Director

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New NHTSA Labels Present Challenges to Dealers

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Warranty work is a large part of any service department’s revenue. The recent announcement by the NHTSA mandating manufacturers to use specific labeling on recall notices could prove to be very helpful to dealers; helping them get the work faster and at a lower cost. However, there are challenges associated with this and dealerships need to be prepared to handle them. With the introduction of this new labeling system, consumers will gain knowledge of the recall sooner, which will increase the influx of service requests earlier.

Frequently when a recall is announced, dealers are poorly equipped to handle the sudden influx of service business because of the scarcity of factory parts that are needed to fix that particular issue. This leads to the consumer getting frustrated at the dealership, not the manufacturer. In those times, it’s fairly simple to inform customers that they will be notified when the dealer has the parts available.

Once the parts become available, the challenge shifts to notifying customers in the primary market area (PMA) who have not yet reached out to the dealership to schedule this work. Some dealerships may choose the direct mail route with notifications. However, only a certain percentage of these customers will actually read the notification. Many will be trashed due to the customer believing that the notification is simply another solicitation. Customers who aren’t aware of the recall will typically receive the recall service when they come in for their normal service. This lack of speedy notification typically gives dealerships the space to handle these recall service requests over a longer period of time.   

As the new labeling system is rolled out and consumers start to understand that these are official, dealerships will be challenged by the increase in the number of consumers requesting this recall work earlier in the process.  Unless dealers are prepared to handle this influx, it will only exacerbate consumer frustration with dealerships.   This makes it even more important to have a process in place to handle recall notifications quickly and efficiently. Dealerships will need to address their customer’s concerns and efficiently handle this work in a way that doesn’t detract from all of the other service business coming in the door.

Hopefully manufacturers will realize the challenges presented and will assist dealerships in handling this influx of service business by ensuring that their dealers receive the necessary parts faster. This labeling system, while great for consumers, could impact dealerships ability to speedily service their customers; as the requests come in at a greater volume earlier in the process. Dealerships must make sure that they are prepared for this, or they will experience an increased level of customer frustration, which could result in a dip in their CSI. 

[Example of new NHTSA recall label]

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