Recall repairs represent a significant source of potential revenue for dealers.
General Motors recently announced it was recalling 5.9 million vehicles due to potentially dangerous airbag inflators produced by now-bankrupt Takata Inc., it was just the latest action taken by an automaker in the U.S.
Through the first half of this year, more than 13 million recalls were instituted by auto companies due to problems with vehicles ranging from the aforementioned airbag inflators to loose bolts to suspension fractures and more. These repairs cost car companies millions – sometimes more – of dollars annually to address.
Although a hassle for vehicle owners, recall-based repairs can be a significant source of income for dealers, service departments already driving big dollars into a dealer’s overall revenue. However, many dealers are missing out potentially hundreds of thousands of dollars of additional revenue due to problems with the information systems in place.
(GM recalling 5.9M vehicles with Takata inflators after NHTSA denies petition.)
AutoAp CEO Mark Paul wrote a book designed to help dealers with recall information.
They can often have error rates exceeding 30%, noted Mark Paul, founder and CEO, AutoAp Inc., whose company after discovering this problem developed a multi-sourced data base to provide accurate information that can be used by dealers to better determine what customers need to have their vehicles serviced.
However, it also allows them to limit their liability when it comes to used vehicles, by accurately determining if a traded-in vehicle has had necessary recalls completed.
Paul, who formed the Portland, Oregon-based company in 2014, said the end result is that dealers who use the service can net their business thousands of dollars monthly by using it. He declined to offer a specific dollar amount, allowing only that its well more than cost of the service.
“The software pays for itself 10 times over every month,” said Brad Preble, president of Carr Auto Group in Beaverton, Oregon. The company’s five dealerships in Beaverton and Vancouver, Washington, represent Chevrolet, Cadillac, Buick, GMC, Nissan and Subaru.
Preble said his company had been searching databases manually, but ultimately found that despite have a single person dedicated to the effort, information was getting missed because it wasn’t in one central place.
He noted by using AutoAp, his team can reach out to vehicle owners to inform them that they have an issue that needs to be resolved.
(Ford recalls 375K Ford Explorers to fix potential steering problem.)
It’s allowed the company, which has used the service for several years, to foster some goodwill with their customer base as well as increase service department revenue. “We’ve been able to solve a problem they didn’t even know they had,” he said, adding that it engenders trust with the dealership.
Despite the fact that most of these repairs are done at no cost to the vehicle’s owners, less than 75% of all recall repairs are completed, meaning there are hundreds of thousands of vehicles on U.S. roads with potentially dangerous and even deadly problems that owners are ignoring. And while automakers struggle to get information out, its auto dealers that are often left to bridge the gap between the two.
Having accurate recall information not only helps drive revenue up, but also limits liability for dealerships.
Recall information used by dealers can come from a variety of resources, including automaker’s websites, the National Highway Traffic Safety Administration’s YMMS safety recall database or SaferCar.gov as well as other options.
Paul noted when his company began to look more closely as these sources, there were a variety of issues. Information errors, such as incorrect dates or models, plus not every resource structures information the same way. So also use certain codes to convey information that aren’t used by the others. Initially, Paul said they tried to work within the system to improve the quality of the data, but ultimately that proved to be too difficult so AutoAp’s safety recall management solution was created.
In addition to the online service, Paul wrote a book, “Safety Recalls: Think You’re Covered” to help dealers and others better understand the need to have accurate recall information. The book, which is part primer and part workbook, can essentially be used as quick and easy resource to resolve issues.
(Toyota recalling 1.5M vehicles in U.S. due to fuel pump issue.)
Paul’s quick to point out that while dealers are the largest segment of users of his system, rental car companies and fleet management firms can also benefit from knowing when vehicles under their control are facing issues. Rental car companies are especially vulnerable because there are laws in several states now that make it illegal to rent a vehicle to a customer with an active recall on it.
