Vehicle Recalls

Posted by Jonathan Cook, Senior II, Tax Services on Oct 19, 2016

Making the best of a bad situation

The National Highway Traffic Safety Administration has reported that more than 8.4 million airbags have been replaced due to recalls in the past two years, and that number continues to grow. The avalanche of defective airbag recalls was catalyzed in 2015 by numerous incidents of injury or death during vehicular collisions, caused by flying metal shards launched from airbags manufactured by a specific Japanese supplier.

Seize the opportunity

While recalls are negative events that creates copious amounts of work beyond the regular scope of business for a service department, there is always a silver lining.

This silver lining presents itself as a considerable opportunity to gain new life-long service clients. According to the National Automobile Dealers Association ("NADA"), most consumers don’t visit their usual service location for recall-driven service appointments. This glut of recall-driven service appointments is a golden opportunity to transform one-time recall customers into life-long service clients through stellar service, resulting in boosts to your service department’s reputation and revenues.

Handle customers carefully

Managing the recall process with tact and couth is paramount. It is important to keep in mind, and to stress to your service advisors, that most new clients received due to recall will be less than thrilled to be taking time out of their day for unplanned service. Ultimately, the only benefit the client receives is the knowledge that a safety defect, something that should not have been present to begin with, has been dealt with accordingly.

One potential solution to managing disgruntled clientele is through the appointment of a recall specialist. The main tasks of this specialist would be to greet recall clients, make them feel welcome by explaining how the recall process works, answering any questions, and helping the client navigate the recall process. It is recommended that this specialist have a robust set of customer service skills, along with the ability to stay calm and collected when faced with anger or hostility.

Create a recall team

While dealing with upset clients is vital to successfully handling a recall, it is also important to skillfully manage the copious amounts of additional work.

The NADA recommends the creation of a recall team. It should include a blue chip service advisor that would be responsible for managing the recall workflow through the service department, along with technicians who are well versed in the repairs dictated by the recall. 

Keep regular customers satisfied

During the pandemonium that can accompany a recall, it can be easy to lose focus on your regular clients. One proactive approach to keeping recall and non-recall clients satisfied is through the hiring of extra service technicians on a part-time or temporary basis. Further, consider extending your service department hours during the recall period, or even opening your service department an extra day of the week, if permissible.

Temporarily reroute workflow

When a recall is announced, a proactive dealership will be able to maximize additional revenue through the streamlining of its service department’s workflow, and maximization of work completion efficiency. “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 blueprint of success is through the temporary redesign of service department workflow in a way that enables your recall team technicians to work quickly and efficiently. For example, you could create a recall lane, where all of the necessary parts are put in an assembly line with the paperwork already pulled together.

Making recalls pay off 

According to J.D. Power and Associates, dealerships have been able to utilize recalls to increase customer service satisfaction scores through proper handling of the additional workload in a client-friendly manner. J.D. Power’s overall customer service index among clients who got their vehicles serviced for recall-related work rose from 777 in 2014 to 789 in 2015. Even more promising, client satisfaction was eight points higher among clients with recall work (789) than among clients with non-recall related work (781).

At first glance, vehicle recalls are a burden that present a myriad of obstacles. However, the benefits are there for the taking if your dealership can successfully navigate these obstacles through the proper utilization of top-notch service, and proactive work management.

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Topics: Auto, Accounting Tips, Tax