Are Manufacturers Going to Self-Regulate Sales of Recalled Vehicles?

If you’re a dealer, no doubt you’ve heard all the buzz concerning recent legislation and regulations about vehicle safety and recalls. Consumers are scared and politicians are responding. With a record number of recalled units over the past 18 months, it’s no surprise that this is a hot topic of discussion and that action is being taken.


Dealerships are certainly making efforts to repair recalls – especially the Takata airbag related ones – but lack of supplies are holding them back.  With AutoNation announcing that they will no longer sell any vehicles subject to recall repair, dealerships have been under pressure to follow suit, despite the financial hardship this is likely to create for smaller dealerships.


A recent Automotive News article reported that Chevrolet has now implemented a program that will reward its dealers for selling certain model vehicles. But, will also punish them for selling any vehicles with open recall repairs. Due to popular demand of crossover SUVs, Chevrolet has implemented a stair step incentive program for three core models – Cruze, Malibu and Silverado – in order to spur sales of these vehicles. This lucrative program promises to pay $1,000 per vehicle if a dealership sells at least one more of each model vehicle than they had in the previous year. This will certainly motivate Chevrolet dealers to push these sales, as high volume dealers could see six-figure bonuses at the end of the year.


With rewards, however, comes a catch. Chevrolet tied stipulations into these bonuses stating that dealers who sell unrepaired vehicles subject to recalls will forfeit any bonus money, calculated by a percentage of sales. Automotive News states as an example, “a dealer who was found to have sold two recalled vehicles from a total of 100 for the month would lose 2 percent of the bonus.”


With the high volume of recalled vehicles, there’s no telling how many vehicles subject to recalls are sitting on lots unrepaired. Dealers naturally focus on completing repair work for their existing customers. So, to now essentially have to compete with themselves for needed parts, may present dealers with a quandary: Do they use these parts to make a new vehicle ready for retail, or do they use them to fix a customer’s vehicle? The priority should be replacing a vehicle that is on the road. This makes the roads safer not just for the driver – but for everyone.


This move by Chevrolet may spark similar moves by other manufacturers. It may be a way for manufacturers to convince legislators that they are taking steps to self-regulate, which could pre-empt any formal legislative actions.


Regardless, we’re certainly seeing a greater emphasis on recall repair completions and some teeth being put behind it by at least one major manufacturer. It will be interesting to watch this unveil and, hopefully, will work out in both the dealer’s and the manufacturer’s favor.

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