In an unprecedented move, AutoNation CEO Mike Jackson recently announced that AutoNation will no longer sell any vehicle with an open recall – new or used. According to Automotive News, this effectively grounds up to 10 percent of AutoNation’s inventory.
AutoNation’s initiative could actually increase its brand image and make the chain more appealing to car shoppers. Knowing that any vehicle they choose to buy will not have any pre-existing issues that need to be repaired will certainly be viewed as a bonus. However, the man-power, time and loss of potential revenue required to implement it nationally could well be cumbersome to many dealers - especially smaller ones who have limited inventory. But, Jackson claims in the article that they are nearing completion of an automated system that will allow dealerships to identify and block the sale of any vehicle with an open recall. He has vowed to make this system available free of charge to any dealership that wants it.
While they can afford to replace this grounded inventory by acquiring up to 10,000 more pieces of inventory for their dealerships, many dealers won’t be able to financially follow suit. Accumulated flooring costs alone from aging inventory would be a hefty bill. In addition, it will become extremely important for dealerships to search for their retail-able pre-owned inventory within their own stores -- auction prices for used vehicles are certain to skyrocket with increased demand by dealers seeking to replace these grounded units.
This move provides a very strong unique selling proposition for AutoNation to relay to consumers. Jackson is certainly making a statement and there’s no doubt that this news will reach the public’s ears and make them take notice. In addition, it’s almost certain that supporters of recall legislation will rally behind this move and use it as an example to fortify their positions. It’s hard to believe that any consumers will object and dealers who do could find themselves in a precarious position -- caught between financial reality and public opinion. It will be interesting to watch this initiative develop and see how it affects AutoNation’s bottom line and also customer perception.