Recall Reconnaissance

Toyota recently notified U.S. owners of approximately 50,000 older vehicles about an urgent recall involving Takata airbag inflators that can explode or release dangerous shrapnel in vehicles.

The industry has experienced previous instances of large-scale recalls related to Takata airbag inflators. Over 67 million of them have been recalled over the past decade, affecting more than 20 automakers, according to the National Highway Traffic Safety Administration.

Skyler Chadwick, director of product consulting at Cox Automotive, warns that dealerships must ready themselves for surges in recall repairs before they happen. He says dealerships have a legal duty to act when the NHTSA issues an automotive recall in order to prioritize customer safety and comply with government regulations.

Chadwick says dealership actions should include:

• Promptly notifying owners of affected vehicles about the recall
• Providing detailed information that names the defect and potential safety issues
• Detailing the steps required to address the problem
• Informing customers of interim measures that may be necessary to ensure safety until repairs are completed.

Next, dealerships must quickly schedule recall repairs and perform them free of charge for affected vehicle owners. It’s vital to have essential parts on hand and well-trained technicians available to do the work, Chadwick says.

Though state laws vary, to sell a used vehicle with an open recall, generally dealerships must disclose the status to the buyer, who can then get it repaired at the manufacturer’s cost. This guarantees customers are informed about safety concerns related to the vehicles they’re buying.

Dealerships also must keep detailed records of recall-related activities, including the number of vehicles repaired, repair dates, and parts used. The documentation helps ensure affected vehicles are properly addressed and shows the dealership complied with recall regulations.

They may be required to report recall-related activities to the manufacturer and relevant government agencies, such as the NHTSA, to track the progress of recall campaigns and ensure compliance with recall regulations.

“Time and availability are two challenges dealerships face [when it comes to recall management,]” Chadwick says. “How many recalls can we do in a day? Are there enough technicians for them? It also comes down to parts and when they come in. How many parts can we get in a day? All of these factor into effective recall management.”

He adds that having a digital means of disseminating recall information, scheduling repairs, and keeping detailed records helps dealerships stay on top of recall management.

Why Customers ‘Forget’ Recalls

Chadwick cites a lack of trust as a major reason customers don't bring in their vehicles for recalls.

The Cox Automotive 2023 Service Study, he says, uncovered significant shifts in consumer perceptions of dealership service centers. One is diminishing trust in the service department and dealerships overall. In fact, he says the study found trust dropped from 62% in 2021 to 54% in 2023.

Distrust has emerged as a prominent factor influencing vehicle owners' decisions to not service their cars at the dealership where they made their purchase, he says.

“People think they are going to be overcharged,” he says. “Or that dealers just want them to come back so they can buy their cars because the customer heard used vehicle inventories were low. Using the dealership service department comes down to: Do they trust the dealership?”

He says that sentiment drives owners to take their vehicles to independent shops for service but that independent shops can’t perform recall repairs.

“Because of this, recalls can be a great way to restore trust,” he says. “In the auto retail industry, we have what we call lost souls, those customers who have not been back to the dealership for eight to 12 months or more. Dealerships can build customer loyalty by effectively managing recalls. Performing recalls well can drive future business, like buying a new car.”

However, a key barrier to managing recalls well is marketing to those customers. Chadwick says automobile manufacturers do a solid job of sending out recall notifications to customers, but, “How do dealerships effectively market to their customer base that their vehicles need a recall and then schedule repair appointments?”

Chadwick suggests dealerships can enhance manufacturer recall notifications with targeted marketing campaigns. Leveraging tools like text messages, email marketing, and mailers can make it easier for customers to schedule recall appointments.

“Doing these things gets customers back into the dealership and encourages them to schedule these appointments so recall repairs are performed.”

Sound Recall Management is Vital

Dealerships should be intentional about choosing the right software partners to streamline recall management. Chadwick’s recommendation is that they select solutions that integrate with manufacturers, allowing them to access recall information promptly and simplify scheduling.

“There is a lot these tools can do to speed up the recall process and help dealerships manage repairs, from scheduling to building trust with the customer. The tools provide the data to help dealers tell the story and build confidence with that customer.”

Software that offers a bidirectional manufacturer integration allows for real-time communication between dealerships and brands, according to Chadwick. By notifying customers of recalls as they schedule service appointments, they can also build trust.

“This alerts customers that their vehicle has a recall. People do not always check their email or may throw out a mailer. But if we can tell them they have an open recall when they schedule an oil change, it sets the dealership up for success. You can schedule the recall repair that same day.”

Chadwick says that tools can help dealerships get a good handle on recall management requirements and evaluate their ability to manage them alongside their regular operations. The software helps evaluate technician and shop capacity for repairs, which he says is crucial for large-scale recalls like the Takata airbag one.

Software tools also help dealerships maintain sufficient parts inventory for repairs.

“The availability of parts directly impacts the dealership's ability to serve customers efficiently,” Chadwick says. “We can automatically notify the OEM that a customer is coming in [for a recall repair], so they can ship the part directly to the dealership. That way the dealership knows those parts are on their way and when they will arrive.”

Digital tools also provide dealerships with valuable information about their customers. Chadwick says stores must identify which percentage of customers are affected by recalls and devise effective strategies to notify and engage them. For example, they might use their business development centers to contact affected customers.

“We can let them know they have an open recall. It’s going to take another week to get the part, and then schedule the repair. Using the BDC in this way is a terrific opportunity for dealerships that are not digitized to get customers in for these appointments.”

Leveraging Service Videos

When customers visit the dealership for recall repairs, service videos can be added to the appointment to build trust by offering them detailed overviews of their vehicle's condition and any additional service needs.

Chadwick points out that when people visit a doctor for tests, they want to hear the results directly from the doctor. The same is true with vehicle service. “A service technician can send the video to the customer and go over it with them. They can tell customers about the health and safety of their vehicle and discuss any concerns.”

In a digital age, consumers are accustomed to visual content, he adds, making videos an ideal medium for conveying information and educating customers.

“Communication is key for dealerships. Videos and pictures are the best way to tell a story to the consumer and to educate them about their vehicle.”

Steps to Prepare for Large-Scale Recalls

When managing a large-scale recall, such as the recent airbag inflator recall, answer the following questions:

1. Do we have enough technicians? Ensuring there are enough technicians to handle the influx of recall repairs is crucial. Monitor shop capacity to optimize scheduling and service efficiency.
2. How do we ensure parts are available? Adequate inventory management is essential to ensure a steady supply of parts, especially during high-demand periods.
3. How will we notify affected customers? Marketing plays a pivotal role in informing customers about large-scale recalls. Dealerships can proactively communicate with affected customers through various channels to encourage them to promptly schedule recall appointments.
4. Are the right tools in place? Chadwick emphasizes a well-rounded recall strategy that focuses on the entire customer journey, from initial notification to repair and beyond. Ensuring that all tools and solutions are integrated effectively, and communication is seamless, facilitates recall management.
5. How can we enhance the recall repair experience? Chadwick recommends starting with education of customers about the recall process, the importance of recall repairs, and how the dealership is equipped to address safety concerns. Digital tools and tablets can facilitate the check-in process and enable service advisers to provide personalized service. Gathering information about the customer's visit history and vehicle condition allows advisers to offer a tailored experience and build trust from the moment the customer arrives.

“These positive experiences can lead to customer retention,” Chadwick says, “additional sales, and, ultimately, a strong dealership brand.”

Ronnie Wendt is an editor at Agent Entrepreneur.

Originally posted on Agent Entrepreneur