Problems And Opportunities In A Recall-Heavy Environment

Dealers facing automotive recalls take a lot of heat from consumers, legislators, and manufacturers. Top performers strategize for success and incorporate dynamic response to capitalize on the retention and CSI opportunity.

2015 has been an increasingly litigious year for parties responsible for keeping unsafe vehicles off the road. A host of reporting and responsibility failures among manufacturers, federal agencies, and dealerships leave communication gaps that have proven dangerous for consumers. A few of the year’s news highlights:

February: NHTSA is called out for shortcomings

2014 was a record year for automotive recalls. NHTSA (National Highway Traffic Safety Administration) was thrust into the spotlight as the agency’s administrator was called before congressional hearings and criticized for their reactive nature and insufficient responses to consumer complaints.

June: Largest auto recall in United States history

Japanese air bag manufacturer, Takata, announces yet another recall on a faulty air bag inflator, pushing the total to nearly 34 million vehicles.

July: $105 million civil penalty

U.S. Transportation Secretary Anthony Foxx announces the largest civil penalty ever imposed by NHTSA. Fiat Chrysler Automobiles acknowledges violations of the Motor Vehicle Safety Act’s requirements to repair vehicles with safety defects. The penalty is accompanied by rigorous federal oversight and buy-backs of defective vehicles from owners.

Last year’s recall activity generated proposed legislation to combat the failing systems, including The Hide No Harm Act and Whistle-Blower Bill. California lawmakers have discussed rulings that would prohibit DMV transactions for vehicles with open recalls. While legislators debate potential resolutions, fixed ops consultant Gary Simmons says dealers’ feelings of recalls run the gamut of fear, opportunity, hassle, and hysteria.

A commonly shared frustration for dealership staff is the threat to CSI and retention when manufacturer communication to the dealership lags media messages to consumers. Phrases in manufacturer recall notices also leave dealers at odds with a frightened customer to deliver manufacturer-promised performance: “done in 30 minutes” or “a loaner car will be available at no charge.” Simmons described the dealer’s unique position in the environment as the absorber of a lot of top-loaded pressure.

Tom Loveall is the service director at Family Motors in Delano, California and he views recalls as pure opportunity. In his opinion, the chance to see a customer that hasn’t come in for two to three years stands to improve retention and a small percent of interactions are even turning into new and used car sales.

Loveall approaches each recall with a strategy. In one instance, the store opened an additional day of the week, extended training to extra techs, booked appointments every 20 minutes, and tackled over a hundred open recalls a day.

“Training, training, training,” he says is crucial to implementation. Loveall said factory training is supplemented with daily meetings to review new recalls and align with the parts department.

DrivingSales fixed ops director, Denim Simkins, offered a global assessment of less proactive dealerships. For technicians and shops that haven’t been directly affected by litigation, he says often dealerships are desensitized by “recall-mania” and allow daily warranty and customer pay operations to trump the importance of proactive recall communication and sensitive customer interactions. Simkins challenges service advisors to view recalls as a service-based relationship proposal. “Provide a service, not a sales pitch,” he said. “This is an opportunity to make the customer feel good about you and establish an opening for repeat business.”

Third parties are entering the space with risk mitigation solutions at the dealer level. Chris Miller, CEO of Recall Masters, worked in the industry for 15 years before recognizing the fragmented market for recall communication presented an opportunity to increase drivers’ safety and attract new customers with valuable and timely recall information.

“We’ve learned along the way that the recalled vehicle owner is very different from your everyday customer,” Miller said. “So training dealerships, service advisors, and BDC’s on how to connect with and counsel these consumers on their open recalls has become a key initiative of our organization.”

AutoAp, Inc., a Portland-based company under the direction of CEO Mark Paul, has focused their dealership safety recall management service on data quality and timeliness. “Our analysis shows NHTSA’s safety recall data has a more than a 30 percent error rate,” Paul said. “It is labor intensive and complicated for dealers to obtain accurate and timely safety recall status through just NHTSA’s SaferCar.gov and OEM service bulletins, alone.”

Further scrutiny among industry players suggests the chaos is likely to get worse before it gets better. As more landmarks begin to raise the bar for automotive safety recall reporting and responsibility it will become increasingly important for dealers to strategize, align, and train their fixed ops teams.