Strengthening Recalls

Strengthening Recalls
No one likes recalls, but dealers can make the process as painless as possible for customers.

A new federal amendment further protects customers and dealers.

Vehicle recalls can be a minefield. Customers don’t always understand them, and dealers don’t always do a perfect job of communicating information about them.

At one end of the scale, according to Transport Canada, about a quarter of vehicle owners never get their recalls done. At the other, some don’t fully understand the recall process, and may be needlessly concerned about heavily publicized recalls that don’t apply to their vehicles.

The federal government has added an amendment under the Motor Vehicle Act, the Strengthening Motor Vehicle Safety for Canadians, which affects recalls. Transport Canada says the amendment gives the Minister of Transport the authority to order a manufacturer to correct a safety defect or non-compliance, order an automaker to pay for the cost of repairs, and ensure that a new vehicle is repaired before it is sold. The amendment builds on regulations introduced in 2014 that allowed the Minister of Transport to order a manufacturer to issue safety defect notices to consumers.

Mandatory, not voluntary

Automakers have to clearly explain the nature of the recall, and what precautions should be taken until the repairs are done. Manufacturers will have to provide information including a chronology of events, field or service reports, warranty claims, and information on when notices will be sent to owners and dealerships. In a statement, Transport Canada said, “While certain manufacturers already provide some of this information voluntarily, the new requirements now will make it fully mandatory for all manufacturers.”

The Act also gives the government the ability to levy fines as needed to increase compliance; to require automakers to test vehicles as needed; and increases flexibility to address new safety technologies.

While these are new tools for Canada, the amendment aligns the country with regulations already in force in the United States.

Canadian sovereignty for safety issues

Huw Williams, spokesperson for the Canadian Automobile Dealers Association (CADA), said the organization is satisfied with the amendment, but noted that Canadian companies already follow up when American automakers issue voluntary recalls. “If there was a U.S. recall, Canada didn’t have to do it, but they’d do it anyway, since the markets are integrated,” he said. “It was happening anyway, but Canada never had the power to (demand a recall) as NHTSA had.

“During the Takata airbags, the issue of whether the Minister had the power (to require a recall) became a study for Transport Canada. The Takata recalls were done, but all parties looked at it and said, ‘We should have the power to order a recall.’ The power was given, which allows some sovereignty for Canadian governments. The legislation isn’t a response to recalls not happening, but that a country should have the right to order a recall going forward, and all parties agreed to that.”

Williams said the average consumer likely won’t notice anything different under the new regulations, because information is widely shared by auto manufacturers. However, it does provide an extra level of security when recalls may not necessarily be issued in the United States, such as when vehicle models or features are Canada-specific and are not offered south of the border.

The big difference is in compensation for dealers. “With a Ministry-ordered recall, the bill provides protection for dealers who would be stuck with the inventory,” Williams said. “Dealers in the U.S. have been lobbying on a state-by-state basis to get protection from manufacturers in the case of a factory recall when they’re sitting on inventory. It can be expensive for dealers to buy the car [from the manufacturer], and when there’s a recall you have no control [over what happens]. If there’s no fix, some manufacturers compensate their dealers, and some don’t. Now there’s a provision that dealers can seek compensation for the recall.”

Williams said the original legislation was brought in under Prime Minister Stephen Harper, but the government changed in 2015. “It died on the Parliamentary order paper because of the election. Marc Garneau (Minister of Transport) introduced it in the Senate in the spring of last year, and CADA began lobbying the Senate to have dealer compensation.”

Looking after customers

No one likes recalls, but dealers can take steps to make the process as relatively painless as possible for customers. It also provides an opportunity to connect with customers who are out of warranty and taking their vehicles elsewhere for service.

Everyone on the service desk should be aware of recalls, especially high-profile ones. If a story breaks on the news, service advisors should be ready for the calls that will be coming in. They should know what the recall involves and what models are affected. If it looks like there may be issues, such as a long wait for replacement parts, staff should know what options they’ll be able to offer customers who don’t want to drive their vehicles in the meantime, working with the manufacturer if necessary.

Advisors should run the VIN on any vehicle that comes in for service to look for open recalls, as well as any vehicles in inventory—and now that compensation is part of the package, it’s important to know if anything needs to be grounded while waiting for parts. Being proactive can create a customer reaction in your favour.

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