LAS VEGAS – Between 20% to 25% of all vehicles on the road have one or more open safety recall at any given time. However, government databases have an approximate 30% error rate, leading many auto dealers to unknowingly purchase and sell vehicles with open safety recalls. The findings were part of "Safety Recalls: State of the Retail Industry," a report released today by AutoAp, Inc., the industry's leading auto safety recall software company.
There have been more than 5,000 vehicle safety recalls since 2014, affecting millions of vehicles. Because many vehicles are covered by multiple recalls, the average vehicle on the road today has 1.2 recalls. Worse, often, there are lags between manufacturers assigning recalls onto vehicles and either the manufacturer or government publishing them for dealers to learn if their inventory is affected. In addition, human error often leads to misclassification of recalls, incorrect vehicle makes or incorrect model years through the government and manufacturers.
"Many automotive retailers do not realize how badly the safety recall ecosystem is broken," said Mark Paul, CEO of AutoAp. "This impacts dealerships of all sizes, brands and locations through liability and compliance issues, as dealers often buy and sell vehicles with open safety recalls and do not know it – through no fault of their own."
Many auto dealers continue to use manual processes to track open safety recalls, or worse, ignore the problem altogether due to the time-consuming, error-prone and delayed data. In addition to liability issues, dealers are often missing out on a valuable revenue stream as recall repairs are covered by manufacturer warranty reimbursements.
"Dealers simply cannot know whether or not vehicles have an open recall using their current methods," Paul said. "The best way to tackle this challenge is through an automated system that verifies VINs using advanced technologies and with multiple sources, on a nightly basis with minimal initial effort by dealers."
Paul urged dealers to take a handful of simple steps to get started.
- Write a policy for the dealership or dealership group that spells out how the organization will handle open recall needs – and have everyone sign it;
- Appoint one team member within the organization to oversee recall operations – with both the responsibility and authority in this critical area;
- Implement an automated process to verify, monitor and report recalls;
- Use daily reporting to identify open recalls and track repair status.
Dealers who follow these simple steps have significantly lower open recall rates among their inventory. Dealerships who develop a fully automated system reduce their open recall rates by nearly 90%.
In other findings:
- Hawaii had the highest open rate at 23.4%; Delaware had the lowest at 5.6%;
- Currently, only 44% of dealerships have a written safety recall management policy;
- 100% of dealers surveyed said staying in compliance was critical. Yet none of the dealers surveyed said they check their own inventory for safety recalls every day;
- Government fleet vehicles have the highest open recall rate at nearly 36%.