In an industry that set a record for recalls in 2014, and with over 34.5 million vehicles recalled by the end of July, 2015, Jackson believes that dealers should take a more active role in protecting consumers. The CEO said, “If every time a vehicle, new or used, moves through the franchised automotive retail system, every recall is completed, then the completion rate on recalls in total, both how fast they get done and the percentage that get done, will increase significantly.”
The head of the largest automotive dealer chain in the U.S., AutoNation, announced that his company will no longer sell or lease vehicles that are under recall. CEO Mike Jackson confirmed the change in policy on Tuesday, saying “The recall situation for the U.S. auto industry is a black eye. It is a dysfunctional nightmare that the industry should be ashamed of, and customers are right to be angry and confused. As part of the industry, we have to hold a mirror up and say, ‘What can we do better as a company?'” Jackson said that the move would be costly to the company, estimating that between five and 10 percent of the company’s current inventory of 80,000 vehicles consists of cars with recalls. AutoNation began the policy six-weeks ago by manually pulling vehicles from its 293 retail locations. The vehicles have been tagged “Not For Sale” until the repairs are made. Jackson said, “We make it our responsibility as a retailer to identify those vehicles and remove them from the market until their safety issues have been addressed.” The company plans having a fully-automated system in place to pull the vehicles by the end of the year. To replace the recalled inventory, the company plans to buy an additional 10,000 vehicles.
Although not overtly saying it, it would appear that AutoNation is attempting to set an industry standard among automotive retailers. Jackson explained, “There’s no way to expect that customers would or should know of every safety recall on every vehicle they might purchase, so we will ensure that our vehicles have all recalls completed.” In an industry that set a record for recalls in 2014, and with over 34.5 million vehicles recalled by the end of July, 2015, Jackson believes that dealers should take a more active role in protecting consumers. The CEO said, “If every time a vehicle, new or used, moves through the franchised automotive retail system, every recall is completed, then the completion rate on recalls in total, both how fast they get done and the percentage that get done, will increase significantly. And there we can make our contribution to the solution.” As part of the policy, AutoNation also stated that it will not sell the recalled vehicles to retailers or wholesalers either, saying that the company “has taken an explicit position that it will not have any role whatsoever in these vehicles being on the road.” Instead, the company will wait until the appropriate repairs are made before reselling them.
In Tuesday’s press release, AutoNation said that it will still accept customer trade-ins for vehicles that have been recalled “even with the understanding that there may be additional time and investment in the processing of these vehicles as part of the reconditioning process.” The announcement and the move to automate the company’s retail process come after two years of internal debate, according to Jackson, who said “When the Takata airbag came along, we said, ‘We can’t go on like this. We need to have an automated system.” The move is strategic in a sense too. Having 35 new-car dealerships under its wing, the company is capable of receiving reimbursements for recalled vehicles from manufacturers, unlike major competitor CarMax, which only sells used vehicles. CarMax announced last month that while sales associates can help customers identify recalls, the “current recall system is based on the manufacturer’s relationship with its dealers and registered vehicle owners, and not with independent used auto retailers, like CarMax.”
Sources:
Automotive News – Amy Wilson
Nasdaq – Dow Jones Business News
PRN Newswire – AutoNation Inc.
Reuters – Joseph White
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