As used car sales continue to climb, legislators are now more cognizant of and are focusing on how dealerships are selling pre-owned inventory without first getting safety recalls repaired.

As I covered in my previous blog, a bill is currently being put forth to Congress that mandates the completion of any recall repair before selling a used vehicle. The interesting thing is that, even if things returned to pre-COVID conditions tomorrow, the demand for used vehicles would not necessarily die off. According to an article in Forbes, shoppers with excellent credit are choosing used vehicles over new ones because they offer a better value for the price.

So, it may pay to take a look at your best practices and consider placing safety first when it comes to selling used vehicles. Some things may need to change to protect your dealership from any future legislation.

To keep it simple, here are three best practices you can easily include in your process right now that can help prepare your staff for pending legislation. These points will also help you market to and reassure customers that your dealership cares about their safety.

1. Proactive Safety Measures – While this might seem like a hardship that slows turn times, how about making friends with your local brand competitors and then come to an agreement where they repair your safety recalls quickly for any off-brand pre-owned inventory and you do the same for them. This also applies if you are part of an auto group. The other franchises have the same issues and, while it may seem counterintuitive to work with a competitor, in the end, it helps all of you sell vehicles faster and market them to consumers as safe and recall-free.

2. Be More Selective at Auctions – This is a no-brainer. If you don’t want to deal with the first scenario, you can use technology to do a VIN scan on vehicles to identify any with open safety recalls BEFORE bidding. Then, at the very least, you know in advance. If it's your brand (or one that is in your auto group,) you can control how quickly that vehicle's open safety recall is repaired and gets to your front line. If it is not a brand you carry, you need another dealership to help as fast as possible to get the repair done.

3. Enhanced Disclosures –If you don’t want to do either of the first two options before the new legislation forces your hand, I would suggest that, at the very minimum, you ensure your used vehicle buyers know upon purchase exactly what open recalls exist -- with safety recalls being the most important. Then, on top of that, include instructions on how and where to get the repairs done. At the minimum, this shows a customer that you care about their safety. Remember, your dealership is still subject to a product liability lawsuit if death or injury occurs as a result of that recall, whether or not you have signed disclosures. Recall disclosures only protect you from Lemon Laws, not product liability laws. In fact, signed disclosures are often submitted into court as evidence that the dealer willingly sold a dangerous vehicle despite knowing the danger posed.

The bottom line is that it is invaluable to be able to move your used inventory while also ensuring customer safety. There is nothing worse than having a customer in the box for a NEW vehicle, coming to an agreement, then discovering a stop-sale because of a safety recall. Well, this could soon happen with your used inventory too.

With vehicle inventory low, many dealers have to place a heavier focus on used cars to stay in business. In the current market, dealers are frequently outbid by other dealers for decent used vehicles or, more likely, are forced to pay thousands over retail value to acquire inventory. Add into that cost any auction fees, transportation, recon, and detailing, and … well you get the picture.

Some larger pre-owned companies such as Carvana bid against themselves to acquire a vehicle. Insane! 

Dealers now have to turn inventory faster to avoid additional costs. And therein lies a problem. Dealers can miss out on acquiring used vehicles because of price. And, with fewer new vehicle models to entice customers to trade, dealers have also lost the best way to acquire front-line used vehicles via service or trade-ins.

As a result, once again recall completion rates fall as used inventory needs to be turned as fast as possible. So many dealers don’t complete the recall work before selling on to a customer, as it is not currently required by law.

Well, that might be about to change. A recent article by the Detroit Bureau discusses these challenges and upcoming legislation that will require by law that recalls are fixed for used cars before being sold to a new customer. According to the article, 40% of used vehicles sold at retail have at least one unrepaired recall. Legislation is being pushed in Congress to put the recall law into place, spearheaded by Sen. Blumenthal, with support from Senators Edward Markey and Elizabeth Warren, (who both co-sponsored the bill). Considering the current political balance of power, this bill has a far stronger chance of passing into law than in the past.

The National Automobile Association argues against this legislation, feeling it would be harmful to dealers by essentially creating a “trade-in tax” that would devalue used vehicles. Consumer advocates don’t agree with NADA. One stated, “I doubt many drivers would consider door latches that might fail, airbags that might not deploy, seat belts that might not work, engines and brakes that might fail, and other serious safety defects our investigation routinely revealed as ‘minor’ problems.”

What a conundrum! I am all for dealerships making money and understand these are tough times. Dealers are paying more for used cars than ever and are being forced to turn cars quicker.

But the bottom line is that any vehicle sold should be safe for the consumer buying it. So, what is a dealer to do? I would love to hear some thoughts on this subject.

Over the last year, any business that remained open did everything possible to reassure customers their premises were safe and followed the latest CDC COVID guidelines. Social distancing, masks, and disinfecting surfaces for customers have become standard practices and, in some cases, are mandated by states. These measures require extra work and extend vehicle turnover time which, as a consequence, reduces revenue. Still, to build consumer confidence in service at the dealership, most made that investment by adding complimentary vehicle sanitization at drop-off.

A recent article in the NY Post shares newly released CDC guidelines which state that surface-level transmissions are infrequent and pose a relatively low exposure rate to COVID of about 1 in 10,000. According to the article, the most frequent way COVID is contracted is through “direct contact with a sick person or from airborne transmission,” not from surfaces. The updated guidelines come as a bit of an insult to small businesses, dealerships included, that purchased equipment/chemicals or paid staff to wipe down surfaces after every interaction. Let’s not cry over spilled milk. What’s done is done. More importantly, what consumers believed is what we all believed – and to earn their business, we instituted policies that no one questioned at the time.

Many dealerships spend a lot of time (and money) on disinfectants and, ultimately, labor hours to disinfect surfaces. Whether those surfaces are desks in the dealership, service vehicles, or cars on the lot, the CDC now reports that disinfectants currently aren’t necessary, stating, “There is little scientific support for routine disinfectants in community settings whether indoor or outdoor to prevent spread through surfaces.” The CDC also states that “In most situations, cleaning surfaces using soap and detergent, and not disinfecting, is enough to reduce the risk.”

What does this new update mean for dealerships? If this is the “new normal,” does the average consumer still expect their vehicle to be disinfected after service? And at the dealership’s expense? 

Many dealers spend a significant amount on disinfectants for vehicles in the service drive when, according to the new CDC guidelines, currently all that is needed is to wipe the vehicles down with soap and water. This can save time, help increase shop capacity, and the volume of vehicles serviced.

Think about how many times disinfectant is used on a vehicle and the expense of that disinfectant. Perhaps a dealership disinfects a service vehicle 4-5 times: When it is checked in, again during the MPI, again before the technician services the vehicle, then again once the vehicle service is completed. That’s a lot of work for something the CDC now states is no longer necessary.

What about sales? Dealerships are disinfecting vehicles after each test drive. And, what about those customers who test drive multiple vehicles? Then they may sit at a salesperson’s desk and, if the dealership closes the deal, customers could be sitting in a waiting area (just like in service.) Is someone following behind every customer disinfecting everything a customer touches?

Of course, customer perception of safety and convenience must be at the top of your importance list and it is key to communicate your safety measures to your customers in a way that makes them feel 100% safe when visiting your dealership.

While the CDC’s update has been widely publicized, it may take a while for the average consumer to learn about it or feel comfortable with the policy. I admit that, if consumers are not current with CDC safety guidelines, it may be a bit of a challenge getting the right message across to your customers, so they do not think you are cutting corners. A good strategy is to post the latest data on your website. Make it highly visible. Get the right message across that the safety of your customers is your #1 priority. Make a video and include it in an email to your customers with their service appointment reminders.

It is certainly a balancing act that needs to be done right. Reassuring customers that sanitary measures are in place in your dealership is an important value proposition. But the latest CDC guidelines about COVID transmission could save you a considerable amount of money and labor hours.

During this pandemic, many dealers introduced measures to ensure vehicle service is more convenient and fits the current lifestyle of their customers. This, of course, comes at a cost. Dealerships have to pay porters or drivers to go to the customer's house, pick up their vehicle, return to the dealership to perform the service, then return it to the customer. What if the labor cost to accomplish this service exceeds the profit generated from it?

Viewpoints are split on the subject. Some auto industry veterans feel that perhaps dealerships should only advertise this service to a segmented audience, offering service pickup and delivery to those vehicle owners who have scheduled service that meets revenue thresholds. And, according to a research study published in Automotive News, when it comes to different age groups, there is a considerable difference as far as those who want pick-up and delivery services or mobile repairs performed at their home or workplace.

As the customer's age increases, the percentage who want pickup and delivery goes from 22% (18-34) down to 7% (55+) when there is a fee involved. Even when it is offered by the dealership for FREE, there is a huge difference as to desire.

If your dealership offers pick-up and delivery, it may be helpful to target your customers differently by age. Be sure to reinforce the value of your dealership and reassure customers that they will be well taken care of. And pay attention to which type of service makes them comfortable. But also take a look at if it is profitable and makes sense to do the service remotely.

It can be a tough call when all you want is to give the best service possible to your customers, but it simply isn’t profitable. It can help to stress the safety initiatives your dealership has instituted so your customers can feel better about visiting in person. Consider making a video of these to send to customers – even include happy customer testimonials from service customers, if you can get them!

Dealerships should also be aware that the Centers for Disease Control and Prevention (CDC) recently stated that there is no significant risk of catching the coronavirus from a surface or object. The CDC clarified its position in a guidance update that states that people generally contract COVID-19 through direct contact with a sick person, or from airborne transmission.  Countless dealerships have invested heavily in vehicle disinfection upon service completion.  We can’t have regrets about following those CDC guidelines – there was just not enough science to refute those early recommendations.

The question is, what do we do about it now? How long does it take for the average consumer to learn about the CDC’s new position? Similar to the early weeks of the pandemic, we can expect confusion as the pandemic subsides. It’s going to take a while for consumers to understand how the guidelines have changed, and whether it’s more beneficial to act out of an abundance of caution. In short, inform customers and let them decide.

If there is a greater opportunity that outweighs the costs associated with pick-up and delivery, then offer that service right up front. Make intelligent decisions on a case-by-case basis to best utilize your resources to achieve growth, profitability, and happy loyal customers who keep coming back.

When discussing recalls, I have always emphasized the importance of recall repair compliance. It makes the roads safer for vehicle owners, their passengers, and drivers sharing the road. NHTSA has stressed the importance of (and put a lot of effort into) notifying these vehicle owners of open safety recalls with the goal of reaching 100% safety recall compliance in coordination with franchised dealers. The partnership between the government and vehicle manufacturers is part of an effort to create more transparency and alert consumers about the inherent risk of recalls. Dealers also play a key role.

Dealers want the extra service revenue, of course, but often place customer pay in front of recalls. However, in 48 states, laws regarding recalls mandate that the OEM reimburse the dealer at retail rates for both parts and labor. Dealerships simply need to navigate a few of the challenges that make receiving full retail warranty reimbursement possible.

Another major hole I find in the current recall system which is keeping completion numbers down is that NHTSA, OEMs, and consumer groups are mainly focusing on first-generation owners. With consumer privacy laws, obtaining current contact information and tying it to the affected VIN is an almost-impossible task. However, ultimately, if 2nd, 3rd, and 4th generation owners are not notified, and do not complete the recall repair work, that 100% safety recall repair percentage is erroneous. There could easily be more vehicles in need of safety recall repairs than just the 1st generation owners who are currently being targeted.

OEMs are only mandated to reach out to original owners. But vehicles are lasting longer and changing hands more rapidly, especially in the current climate with a shortage of new vehicle inventory. Dealers are being forced to pay more for used vehicles at auction, sometimes thousands of dollars more than the vehicle is worth. They then need to flip the vehicles as fast as possible, in many cases not bothering to identify whether the vehicle has a recall, much less do any needed recall work. This means a lot more dangerous vehicles on the road in the hands of consumers who do not even realize their vehicle needs recall repairs. Dealerships are not required to tell a consumer if one exists on a used car sale, so many dealers do not offer more than a simple disclosure at the time of sale, buried in the paperwork. We can do better.

It is crucial that the current climate changes and that the industry makes a concerted effort to find these next-generation vehicle owners. I keep seeing reports that there are one in five vehicles on the road with an open recall. The actual statistics are even more gruesome because the truth is that it is more than one in four if you count all of the vehicles that have been passed on to other owners. The quantity of unsafe vehicles still on the road is more staggering than anyone can calculate.

On the plus side, a lot of dealers would love to find these 2nd, 3rd, and 4th generation owners and gain the additional service revenue from the recall repair, while also having the opportunity to make these vehicle owners repeat and loyal servicers at the dealership.

You might be amazed to learn that approximately 52% of recall customers will continue servicing their vehicle with your dealership over the next 12 months. And, when they are ready to buy their next vehicle, your dealership will have created a relationship with the customer and have the first opportunity to sell it to them.

I urge you to make a concerted effort to find these next-gen vehicle owners. Take the time to search for these vehicle owners through 3rd party data and ensure that every vehicle in your service department or on the lot is checked for an existing recall and repaired as needed. The upside is phenomenal. Not only will you make your OEMs happy, but you will also increase revenue and customer acquisition.

Today's vehicles have more technology than ever before. With OEMs on a mission to make more EVs; Apple entering the retail automotive space; Tesla continuing its brand popularity; and vehicles more operated by computer than by motor, problems are sure to arise!.

Technicians are already in short supply. Dealers are doing everything that they can to recruit new techs and train them on the job while they rely on their Master Technicians to do the heavy lifting on complex repair orders. The problem is two-fold in this arena. First, Master Technicians are not necessarily trained to handle the intricacies of complex computer language. And second, for those technicians hired for entry-level positions, typically for quick service, it takes quite some time training to get to the level of a Master Technician, in addition to learning the technology side.

To speed up the process, many service departments now search for employees who have service potential along with good computer skills. When you combine an increased demand for consumer service with a lack of technicians available to complete the repair, dealerships may find themselves so backlogged in their service departments that consumers go elsewhere or forego necessary software updates and recall repairs.

New vehicle models will continue to be more reliant on computers and software. The competitiveness of manufacturers, combined with tight deadlines to accomplish environmental goals, may force some of these vehicles to be introduced to the market prematurely. At that point, issues they are not even aware of tend to arise. These issues will invariably translate into recalls. And what is even worse, it is one thing to experience glitches on your home computer or cell phone and quite another to have a vehicle perform unsafely due to faulty software or electronics.

Our industry could easily end up with many vehicles owners cannot drive at all. Or they drive them anyway, knowing they are unsafe and are putting themselves, their passengers, and other drivers at risk. It is already a challenge to get a consumer into the dealership to complete recall repairs. It will be even tougher if we compound the problem with fewer dealerships to get these recalled vehicles repaired due to a lack of shop capacity or technicians trained to handle these technologically advanced repairs.

As a result, this recall crisis is just getting started.  There’s a tsunami of software and electronics recalls that will inundate our industry over the next decade, and likely further into the future as well. While EVs and advanced technology in vehicles may present an advantage to the environment, or increase consumer comfort, we must always remember that no vehicle is perfect, and many have had some sort of recall in their lifespan. By adding software technology and electronic components made of plastic, many dealerships are not yet equipped to keep up with repairs, increasing the danger and threatening the safety of all who share the road.

A salesperson has to build rapport during the initial meet and greet with the shopper. Once they have worked their way into an (at that point) semi-familiarity with the customer, they should move on to the fact-finding step. In this step, salespeople ask questions to help direct the customer to the vehicle that best fits their needs. Or, if the customer already knows what they want, they can pick up key information to better guide the sale.

A good salesperson will quickly spot a customer’s “hot buttons.” Maybe they are interested in performance. Or perhaps they need a vehicle for a family. The customer’s interests should be highlighted in the vehicle walk-around. And, regardless of customer interests, one thing that is always of interest is safety.

A consumer has probably researched multiple makes and models before coming to the dealership in person. How can you be different from your competition, aside from having a different vehicle?

Show them that their safety is important to you!

Not applicable to new vehicles, but definitely for pre-owned inventory – check for an open recall.  You might think it’s a risky step in the sales process, but checking the vehicle, right there in front of them, for a recall will build their trust in you and the integrity of your dealership brand.

Some dealerships may shy away from using this tactic simply because they think a customer would lose interest in that vehicle and move on. But that is not the case.

A dealership cannot legally sell a new vehicle if it has any open safety recalls. That being said, sometimes that information is slow to spread through the ranks of sales and service. A friend told me that they went through the whole sales process and were waiting to go into the finance office to sign papers and drive off in their new vehicle. Then the sales manager showed up at the last minute and told them that he could not sell the vehicle to them because it had an open recall. They were pretty upset after spending hours going through the process only to be denied.

In the case of used cars, dealerships are not legally obligated to ensure open recalls are addressed before the sale. In fact, if the pre-owned vehicle is a different make, they may not even know about it. Many dealers have simply taken the step of adding a waiver document into their finance process stipulating that they are not responsible for any open recalls – which is not altogether true -- read https://www.recallmasters.com/whats-at-stake-legally-when-selling-a-used-car-with-an-open-recall

If the customer drives off in that vehicle and finds out after the fact that it has an open safety recall, they are probably not exactly happy with the dealership. In fact, in a consumer survey performed by Recall Masters, 85% of respondents indicated that they would be upset with the dealership.

In all likelihood, when faced with a recall, consumers appreciate full disclosure. You can take it one step further and if the vehicle is a different make to your franchise, locate a franchise dealer close to them that will perform all the repairs. Remind the consumer that the repairs come at no cost to them and that more than 1 in 4 vehicles are on the road with an open recall. Consumers crave transparency, especially when shopping for a used car.

Serving in the interest of the buyer will elevate your dealership’s profile as a trusted partner.  That’s where referrals come from.

It’s a very competitive market. Differentiation is key to building rapport with the customer and setting your dealership apart from your competition. Do a quick VIN scan during the walk-around with the customer and reassure them that, in addition to all of the normal safety features, there are no open recalls. Going the extra mile to ensure their safety and welfare could be the catalyst to winning a customer.

Customer retention can be tough. Independent repair shops lure customers away in droves with coupons or offers that promise low routine maintenance pricing. However, winning consumers on price alone is a short-term victory compared to winning over their loyalty for the long haul with quality work, certified technicians, and impeccable service. Luring them back is easier than you think. Ditch the discounting and invite consumers to the dealership by looking out for their safety while showcasing your dealership -- without charging the customer. How? Recalls. 

Consumers will come into a franchised dealer if there is a recall… maybe… that is if they know about it. But what happens then? The customer could easily return to the local Jiffy Lube or other convenient places to resume that regular maintenance once the recall work is completed.

Franchise dealers have always had the edge when it comes to the health and safety of a vehicle. Dealers have access to diagnostic equipment, factory-trained technicians, and software that independents don’t have. AND independents can’t complete those recall repairs. If they do have access to diagnose or identify a recall, all they can do is perform the routine maintenance then send the customer on their way to their local franchise dealer to get it repaired. That sounds pretty inefficient to me.

One thing that has not changed despite the pandemic is that consumers value time. Imagine going into a grocery store that promises low prices, finding some of the items on their shopping list but then having to go to a different grocery store to get the remainder of the ingredients needed. That would be pretty annoying, right? Well, that is exactly what is happening daily when it comes to vehicle repair.

Also, those technicians at some shops that perform routine maintenance on a consumer’s car have little training. Just check the employment advertisements. Some independents are soliciting employees for quick service for $8-$10 per hour with “no experience necessary.” Is that someone a consumer should have ensuring that their vehicle is safe?

I know that dealerships are often faced with a quandary. They can join the race to the bottom to compete with the local independents, or they can convince the customer that the dealership is the best solution. That the dealership will service them well and are the one-stop-shop for all of their vehicle needs. Dealerships can also ensure that their vehicle is serviced by factory-trained technicians that can handle all the repair work AND any recalls that may exist – safety-related or otherwise.

Similar to sales, in service the competition for business seems to be all about price – but it doesn’t have to be. Prove your value to your customers through quality work and time-saving benefits. It is sure to help in customer retention. By showing customers that your dealership intends to ensure that their vehicle is always maintained properly and that you can handle all maintenance and repairs with quality workmanship by factory-trained techs, your dealership has an extreme advantage over any independent in existence. Sadly, many dealerships do not take advantage of this value proposition or don’t communicate it to their customers effectively, if at all!.

If your dealership took the time to explain to all customers AND promoted widely why you are more valuable to them than an independent, many customers would understand that even if the dealership service may cost a little more, the quality of work and time saved will outweigh the small savings that they get at an independent.

Show your customers that you intend to ensure their vehicle is safe, is repaired by trained OEM professionals, that you can save them time, and can, in the long run, save them money by preserving their vehicle asset. You can win over service customers and retain them, stealing that business away from independents.

One thing that the holidays usually bring is travel. Families want to celebrate the holidays with loved ones and, this year, even during the COVID-19 pandemic, traveling is still happening. The difference right now is that a LOT more people are choosing to drive rather than fly, according to CNN. People feel better making these trips in the comfort of their vehicle simply because they see it as safer than air travel; in their own space with other members of their family, versus in a metal tube with hundreds of unknown people 35,000 feet in the air.

While Holiday travel during a pandemic is a personal choice (regardless of the method of travel), as far as the risk of COVID-19, there is another risk– and that is the health of their vehicle.

In the past, it was a common practice for consumers planning long-distance travel to have their vehicle checked out and serviced before traveling. Some vehicle owners still continue that tradition. However, while the pandemic continues, for many families, anything other than routine maintenance – especially those repairs that could put their vehicles out of commission for indeterminate amounts of time – may be put off with the thought process perhaps being, "We'll be alright and get that repair done when we return."

Because of this, there will probably be a larger percentage of potentially unsafe vehicles on the road this Holiday season. While COVID-19 is absolutely a risk that people should consider when deciding to travel, they should also consider the safety of their vehicle if planning a road trip instead. Road safety is just as important – if not more so – during the Holidays because of the added number of road travelers. Now is a good time to reach out to your service customers and get them in for a Holiday vehicle safety check and any recalls that you have parts availability to complete.

Everyone should be able to enjoy the holidays with their families -- but 2020 has been filled with party spoilers. Don't let your customers end up in a position where their holiday travels are ruined by car trouble, much less a pandemic. This double whammy safety concern should be top of mind for everyone. To protect consumers and their families safety should always be first. Anybody choosing to drive versus fly out of the concern of a pandemic should be equally concerned about the safety of their vehicle.

Have a great holiday season and my hope is that everyone stays safe!

The retail auto business is stressful for all departments. In normal times, employees work 50+ hours per week simply to keep up with the demand from both customers and management. However, during the current pandemic, all departments are working harder than before to not only make a living but also to keep up with the expectations of their managers.

Front-line employees reflect your business as a whole. If those employees are stressed out over money or overtaxed by management’s expectations, this can easily spill over into the customer’s experience and affect their perception of the dealership.

So, what can be done? Here are a couple of simple points I have found that successful dealerships apply rigorously. And, best of all, they do not cost any money, but yield a huge ROI! These simple things can help lighten the mood for your team, which can translate into an exceptional experience for your customers.

1. Recognition – Not everyone is motivated by money. But don’t misunderstand me; of course, the reason employees work in the first place is for that paycheck. However, that $50 spiff may not be as important as being recognized for their work, either personally, or as part of a team. Many people are working from home, or in a limited capacity. Be sure to make it a point to let all of your employees know that you appreciate them.

2. Compassion and Flexibility – During these difficult times, you may find that your employees are experiencing stress in their personal lives as well. They may have kids at home and have trouble juggling schedules and childcare duties as babysitters can be harder to come by. Hopefully, your employees have found suitable solutions but, if they have not, work with them and let your team know that you understand. Show them that your dealership cares about them and their family. This small investment of time will make employees more invested in your business.

3. Performance Metrics – I am sure you are familiar with the “hero to zero” phrase. Every month starts over. If you are holding your employees to the same performance metrics as you were before, but your business has gone down, you might want to reconsider what a “good job” is right now. For example, let’s take a salesperson who averaged 12 cars per month pre-COVID. If your traffic or leads have dropped 25% because of the pandemic, it may be unfair to hold your employees to the same metrics as before when considering job performance. This not only applies to sales but also to service. And if your business is doing better, as it is in some states, then perhaps you need to reevaluate up!

The point is that we are living in abnormal times. It is more important than ever to treat your employees just like you would your customers – or perhaps even better! Thank them for their business (work), show them that you care about them (compassion), and reevaluate what you are expecting them to do about how your business is currently affected. It is often said that your employees will treat your customers only as well as they are treated as employees.  How do you want your staff to treat customers when you're not looking?

I hope these simple tips are of some help. These are just a few ways to maintain a great company culture and keep your employees engaged with your business. They can help encourage your employees to be more invested in your business and that will translate into a better customer experience.