Aside from the rare exception, just about every dealership in the nation has been impacted by recalls. Sure, there are a few OEMs who have dodged major manufacturing defects and a scattering of dealerships in rural markets where the lack of competition leaves vehicle owners with few repair options. For the rest, an aggressive recall strategy has emerged as one the best-performing efforts in driving sales and service revenue, reengaging passive customers and winning market share from competitors who have fallen asleep at the wheel. All this, and I still haven’t mentioned safer products for our customers. Still, if the key performance indicators all point north, why the hesitation from some dealerships?
Let’s dispel some myths about recalls. I still hear the same excuses today that I heard years ago, but most revolve around the disruption of existing operations. Here’s the headline — recalls are not going away — they are your existing operations. This is not to suggest that reimbursement rates for recall repairs are as lucrative as CP work, though in Colorado, state laws require the factory to pay retail rates for parts and labor. Fail to wipe clean the first layer of dust and you’ll overlook what recalls are really doing for dealerships — bringing consumers back into the dealership for service.
What’s your fixed ops strategy for getting customers back into the service drive? Can you name one strategy that doesn’t encompass deeply discounting services or giving products away? In a fiercely competitive market driven by price as a differentiator, the independent repair shops are probably kicking you straight in the teeth.
Luring price-driven consumers with coupons insults your existing customers and invites consumers who are no more loyal to you than the next coupon they clip. With recalls, you don’t need to compete on price to win consumers back from price-gouging independents. However, you do have to win on delivering better service than the competing dealer in nearby markets. Those dealerships that roll out the red carpet to recalled vehicle owners are salivating over your PMA. Recall management is no longer a fringe strategy to keep your service department busy, but rather a major disruptor in the automotive industry that is winning consumer loyalty.
Another common excuse to take the spotlight off of recalls lies with the dealership’s perception that recalls are an OEM problem, and that the solutions will come from the factory. There’s no disputing the fact that OEMs are under mounting federal pressure to remedy high-risk recalls like faulty Takata airbags.
Despite intense efforts, OEMs are seeing dismal results in two areas that directly impact recall completion rates — finding current vehicle owners and compelling them to bring the vehicle in for repair. It’s just not happening at an optimistic pace to offset new recalls hitting the market daily. While simple notification used to be the standard for factory compliance, federal legislators, consumer safety groups and the OEMs themselves are calling for improved recall remedy rates. The emphasis on getting those dangerous recalled vehicles into the dealer service lane has opened the doors to third-party providers who specialize in data to locate current owners, technology to assist dealerships at the point of service and communications that encourage consumers to take action.
As an industry, we haven’t done enough. As consumers, we probably haven’t cared enough either. State and federal governments have also delivered uninspiring reforms. However, the climate is changing at the behest of all these interested parties and with the performance of select dealerships and OEMs who have taken a more comprehensive approach.
There is a massive shift in recall consciousness, from dealers who recognize the opportunity to consumers who gravitate to dealers and OEM brands that stand by their products. And, as vehicle technology evolves from moving parts and combustion engines to software and computers, recalls will hover menacingly over us for the foreseeable future. The question isn’t whether your dealership should take recalls seriously, but rather which side of the chasm does your dealership want to be? Even for those dealerships in rural markets or selling brands with few recalls, the next evolution of driverless cars, lane correction technologies, electric vehicles and voice-enabled cabins, progress will not be halted, and neither will recalls.
Dan Beres – Recall Masters
