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Handling Vehicle Recalls - Or How to Win Friends and Influence Customers

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The number of vehicle recalls in the U.S. has gone sky-high in the last couple of years, setting a new record of nearly 64 million safety recalls in 2014, according to the National Highway Safety Administration. The Detroit News reported that General Motors alone issued 71 separate recalls in 2014, covering nearly 30 million vehicles worldwide.

A double-edged sword

Recalls can be a double-edged sword for dealerships. On the negative side, they can bring an avalanche of work crashing down on your service department in a relatively short period of time. This can disrupt normal service department operations, put a strain on your service employees, and make it difficult to meet the service needs of your regular customers.

On the positive side, recalls can present a tremendous opportunity to attract new customers who aren’t currently having their vehicles serviced at your dealership. They also can bring fresh faces into your showroom, which then become potential prospects for buying new vehicles.

According to the National Automobile Dealers Association (NADA), most car owners visiting a dealership for a recall typically don’t have their vehicles serviced there. So a recall offers you the chance to impress potential customers by providing outstanding service. A well-managed recall can also boost your service department’s reputation and revenue.

Handling recall customers with care

Managing the recall process well is the key. Most car owners aren’t thrilled to have to bring their vehicles into the dealership for unplanned work. After all, it’s an inconvenience for them, and they don’t get any benefit other than knowing that the safety problem with their vehicle has been fixed.

One solution to this potential negative is appointing a dealership employee whose main job is to greet recall customers and make them feel welcome. This employee could explain how the recall workflow process works, answer questions, and point customers to where they should go to get the process started. He or she should have strong customer service skills and be able to soothe and reassure those who might be angry.

Dealing with upset customers is just one part of the challenge involved in handling recalls. The other is managing the additional volume of work that will come into your service department. NADA recommends creating a special recall team. It should consist of:

  • A top-notch service advisor responsible for managing the recall workflow through the service department, and
  • Several technicians who specialize in the particular kind of repair dictated by the recall.

Yet another challenge is providing a high level of service to your regular customers while meeting the needs of your recall customers. Doing so might require hiring additional service technicians on a part-time or temporary basis, or transferring technicians over from another location if you own multiple stores. Also consider extending your service department hours during the recall period, and possibly even opening your service department an extra day during the week.

Recalls as a profit center

Recalls can bring in additional revenue for dealerships that are able to streamline their service department’s workflow and maximize efficiency in the completion of the work. “If your service technicians can complete the recall repairs in less time than what has been budgeted for the repair by the manufacturer, the recall work becomes a profit center for the dealership,” said a NADA spokesman.

The key is to temporarily redesign service department workflow so technicians can complete the recall repairs quickly and efficiently. For example, you could create a special “recall lane,” where all of the necessary parts are lined up assembly-line style and the paperwork is already pulled together.

Also, schedule recall work strategically. Don’t book your recall service schedule completely full. Instead, allow some flexibility to accommodate walk-ins. Doing so will make it easier for you to deal with the unpredictability of recall work and maintain a higher degree of customer satisfaction.

From lemons to lemonade

From your dealership’s perspective, recalls aren’t necessarily a bad thing. You can turn this potential lemon into lemonade by having a plan in place to truly manage recalls – instead of letting them manage you. A successful effort can help you maximize potential income, minimize car owner inconvenience and possibly gain new customers.

Sidebar:Vehicle recalls impact CSI scores

According to market researchers J.D. Power and Associates, handling recall work efficiently and in a customer-friendly way can pay off for dealerships in the form of higher customer service satisfaction scores.

J.D. Power’s overall customer service index among customers who take their vehicles to a dealer for recall-related work rose from 777 in 2014 to 789 in 2015. Also, satisfaction is eight points higher among customers with a recall visit (789) than it is among customers with a repair visit (781). In addition, the satisfaction gap between customers with recall and nonrecall dealership visits shrunk from 27 points in 2014 to just 11 points in 2015, according to the research.


Dealer Insights - March/April 2016

Dawn Rosoff CPA manages audit assignments and consults on accounting, management and tax-related issues. Member AICPA and PA Institute of CPAs.

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