15 Aug

Auctions and Recalls: Swimming with Sharks

  • Recall Masters
  • Blog



The Discovery Channel’s “Shark Week” has become a cultural phenomenon in our country. Sharks are relatively mysterious and most people don’t know much about them. Cars are very similar in nature. We know that we need them and which ones are cool, but most people don’t really know how they work. And not only that, as one in six vehicles on the road has open recalls unrepaired, these vehicles can present even more of a danger to other drivers than sharks ever could — and nobody would know… until the car bites.

Legislative bodies and government regulators are concerned about the percentage of vehicles with open recalls that remain unrepaired. As a result, it is illegal to sell any new vehicle with an open recall. This has placed a large burden on manufacturers and dealers as they are now forced to sit on inventory which cannot be sold because the parts to fix the recalls aren’t available.

If you consider the huge plague of recalled vehicles, it’s not that much of a stretch to anticipate that regulators will soon extend this “do not sell” rule to pre-owned vehicles. It certainly seems logical. In order to increase the percentage of recall repair compliance, our industry simply cannot allow ANY vehicles – pre-owned or new – to be sold with any open recalls. That should help increase compliance.

A major channel for dealer vehicle acquisition and inventory replenishment is auto auctions. Most used car managers spend a lot of time researching the vehicles, running vehicle history reports and, in many cases, physically inspecting the vehicles prior to bidding on them. The one component that’s missing – but should be top of mind – is whether the vehicle has any open recalls. You have to admit that a vehicle with a clean vehicle history report AND no open recalls is premium front-line material.

However, what happens when you get a clean history report but there are open recalls? One choice is to sell the vehicle and educate the buyer that there are open recalls on the vehicle. This is certain to create doubt in their mind and make them less confident in their purchase. The other option is to fix (or have fixed) any open recalls that exist prior to selling the vehicle. And the third, and perhaps best option, is to ensure that any vehicles acquired have NO open recalls prior to purchasing them in the first place.

Nobody knows when the hammer will drop. While you may be sitting back saying “it’s not against the law to sell a pre-owned vehicle with an open recall,” there are plenty of lawsuits pending at present time where consumers are suing the manufacturer AND the dealership for injuries resulting from an accident involving an open recall. Major auto groups including AutoNation recognize the liability inherent in selling these vehicles. NOT selling them and guaranteeing customers that 100{25fe8d719f8aa7fee9d6d1ab25a6c722d6f7475fb64135bdf6c46b52738109f1} of their inventory is recall free provides them with a competitive advantage in a marketplace where consumers are bombarded with news about dangerous recalls.

Consider making it a practice in your dealership to ensure that any vehicle acquisitions via auctions do not have any open recalls. You’ll save yourself the headache of fixing them, the wallet-ache of sitting on them waiting to be fixed, and the danger of liability should something happen to the customer. As a result, your dealership should be positioned to further customer trust and your livelihood safeguarded from potential catastrophe.

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