The subject of recalls has provided plenty of fodder for some in the media. Certainly, vehicle recalls are an explosive issue that places dealerships on the front lines of consumer anger and frustration. At the same time, dealers are also positioned to resolve the situation, restoring the consumer’s confidence in the brand and solidifying or commencing relationships.  Admittedly, at Recall Masters, we’ve touted the success of using the recall effort as a means of driving sales and service revenue. Without a doubt, a documented boost in revenue is quite the enticement for dealerships to build an effective recall department.  But, at the risk of appearing opportunistic at the expense of the consumer’s misfortune, we advise that dealers focus on vehicle safety, customer service and doing what is in the best interest of the customer.  As such, in turns out that “doing the right thing” can also yield opportunity for the dealership, but only if approached properly.
There are always multiple perspectives when it comes to events that affect millions of people with far-reaching implications. The recent Takata airbag recall presents especially difficult problems due to the nature of the potential danger to the consumer, the limited availability of replacement parts and the sheer numbers of vehicles affected. The resulting situation is problematic for dealerships and OEMs and extremely frustrating for consumers, government entities and consumer advocates. In a situation like this, there are no clear winners and it’s understandable that dealerships would rather avoid the whole situation to begin with.  However, in side-stepping a sensitive environment, as well as a role as a solutions provider, the dealership also surrenders the customer to a competing dealership.  Again, the consumer has a potentially life-threatening situation on their hands – they have no choice but to find a solution.

We should all be concerned about taking unsafe vehicles off the road and placing customers first.  In so doing, there’s no extra emphasis on driving revenue through recalls, as, it turns out, sales and service revenue is a natural subset of helping the customer, along with a boost in dealer CSI, renewed loyalty in the brand and relationships that are built on resolving a difficult customer situation.  The true test of a relationship is how difficult situations are handled.  And, given the enormity of these recalls, these situations would certainly be characterized as difficult.

I encourage all dealers to invest in reaching affected vehicle owners in their primary service area and to communicate in such a way as to compel them to come into the dealership for the necessary recall repairs.  Communicating recall information to consumers is a delicate matter, as fear and disappointment are elevated for the consumer.  The dealer is then either a savior or a bearer of bad news.

Dealership Viewpoint

In much the same manner that consumers find themselves subject to the misfortune of a recall, so does the dealership. The OEM brand’s integrity is under assault, and with it, so goes your dealership’s brand.  Now is the time to preserve and protect the attributes of the name that carried your dealership for decades.  What you’ve accomplished historically brings little comfort to the consumer who now faces a vehicle recall.  At that moment, you are one of “them” – the origin of the frustration, anxiety and now, the waste of time.

The challenge of overcoming the debacle of a vehicle recall now falls at the dealer’s doorstep.  Still, for dealerships that are optimized for customer service, there’s no cause for alarm. This is a moment to shine. Consumers that are already at their wit’s end with annoyance and paralyzed with fear about what’s at stake with their next commute, are now looking at you as either savior or scapegoat. As previously mentioned, recall traffic in your service drive can also translate into a revenue opportunity, but the potential capacity requires that your dealership make necessary modification in both the sales and service departments.  Consumers subject to recalled vehicles are very unique and need a custom approach to problem-solving.

The fact remains that, if not for a recall that requires repair intervention from the dealership, most consumers would prefer NOT to be in the dealership’s service drive. I do not intend to offend.  I am simply stating a fact that should not be news to dealerships. For years, customers have been migrating to independent repair shops for ongoing vehicle maintenance, a point of frustration for the dealer’s customer retention effort.  Recalls present a tremendous opportunity to generate consumer touch points that would otherwise never have happened.  If handled properly, these consumers will migrate to regular customers who will service with the dealer regularly and consider the dealership when in the market for a new or pre-owned vehicle.  These are the essential building blocks to customer lifecycle management.

As dealers look to evolve from purveyors of a commoditized product to the consumer’s trusted advisor for vehicle sales and service, the relationships begin humbly through recall management.  Those dealers that do right by the customer, not only put them in a position for increased sales and service revenue, but also realize more immediate benefits like a boost in dealer CSI and the chance to reframe the consumer’s perception of the dealership experience.  It’s not only the right thing to do, but the smartest.  Does revenue emerge from recalls?  Yes, but only when you treat the customer with respect and empathy for the plight that they face as a result.  If dealers approach recalls with only revenue in mind, it becomes apparent to the consumer and further inflames their frustration and annoyance.  There should be no intent to be a profiteer from the misfortunate.

One of the key pillars to recall management is the creation of a Recall Department, which begins with best practices training This ensures recall campaign success, provides best practices tools and processes and properly prepares the dealer staff on how to win customers for life, with the side benefits of making the roads safer for all drivers, generating new sales and service revenue and boosting in dealer CSI.  Once the dealership has completed training, has properly trained technicians on recall repairs and ordered the necessary parts, they’ll also need to consider the potential recall volume and how it may impact operations.

However, the elephant in the room remains that, in the case of the Takata airbag recall, there is a huge lack of parts availability. With upwards of 85 million vehicles that may be affected by this recall, there’s no mistaking that most consumers will have to wait.  Despite a dealer’s well-intended measures to assist consumers with recalls, there is no immediate fix if replacement parts are not available.  Still, owners cannot continue to drive a recalled vehicle which could kill or hurt them. Because of this many manufacturers, such as Honda and BMW, are directing dealers to confiscate vehicles subject to recall and sending customers home with a loaner or rental car.

According to an article in Automotive News, these manufacturers are telling dealers that the factory indemnification of the dealership will not apply if vehicles subject to recall leave the dealership. That’s probably news to dealers, who may not realize what the liabilities are. While some manufacturers are making allowance for loaner and rental cars, dealers are also scrambling to find space to store these recalled vehicles until the necessary parts come in.  Liability doesn’t end with the service department, it extends to vehicle sales.

While the federal Motor Vehicle Safety Act strictly prohibits dealerships from selling new vehicles subject to a recall, the law does not prohibit a dealer from selling a pre-owned vehicle from the dealership’s inventory. Still, as any personal injury attorney can attest to, dealerships risk significant liability should death or injury come about as a result of the recall that went ignored by the dealership, whether intended or not. The legal community has yet to address the matter in a court of law, most agree that tort law would support a claim against the dealership. It is conceivable that the manufacturer’s legal counsel could contend that the dealership lost its right to seek indemnification upon ignoring the directive not to sell the recalled vehicle.  While not in a position to offer legal advice, I would suggest that every dealership pursue the necessary recall management protocol in order to mitigate these types of legal liabilities.  We are in a litigious society and it’s imperative that the dealership take all measures necessary to reduce risk.  At the end of the day, dealerships will likely be held accountable as “experts” in a vehicle sales transaction by a judge or jury.  Again, effective management of recalls is not only the right thing to do, but the smartest.

In the next part of this two-part series, I’ll share the consumer viewpoint, to hopefully help you better understand their state of mind and why, in the end, dealers should embrace recall customers.

 

The second part of this two-part series.  Click here to view Part II.