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 h*** 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.