Car 1 News

Industry News, Notes & Tips

Report: Dealers won’t be the only ones hurt by used car recall bill

by Chad D. Baus
  • Sales
  • Comments Off on Report: Dealers won’t be the only ones hurt by used car recall bill

RecallGetting recalls performed is important, and every single vehicle in CAR 1’s inventory has been checked for recalls and had them performed if possible. With that being said, we oppose legislation that would make it illegal to sell a used car that has an open recall, and a new report shows why consumers should be as well.

From HartfordBusiness.com:

The National Association of Automobile Dealers is out with a report that claims consumers would be significantly hurt if a law banning used cars with recalls from being sold is enacted. U.S. Sen. Richard Blumenthal’s proposal, the trade group claimed, could cost consumers anywhere from $1,210 to $5,713 per car.

The article notes that while current federal law prohibits the sale of new cars under recall until they are repaired, it does not require the same of used cars.

If such a proposal were to become law, it won’t just be dealers who are adversely effected.

The NADA said in a statement that requiring auto dealers to fix all outstanding safety recalls before selling or leasing any used passenger motor vehicle could have an adverse impact on the value of those trade-ins. “This trade-in allowance is an important part of the overall transaction because, typically, the consumer uses it to fund the down payment needed to finance the purchase or lease,” the NADA said.

In many cases, there are months and months and months of delay between the time a recall is issued and when parts to make the repair become available. The NADA report goes on to say that because dealers will not know in advance how long a recall delay will last, and thus must estimate the delay, this will exacerbate the trade-in value reductions that consumers will face.

Think about it. If you own a car that can’t be resold by a dealer for an unknown number of months, how much do you think you’ll be able to get for it from a dealer on a trade? How much would you pay for a vehicle that you can’t put to use for an unknown period of time?

It’s just common sense. If it becomes illegal for dealers to sell used cars with open recalls – especially including recalls for which there is no remedy yet available – the risk associated with trading in a vehicle (ANY vehicle, since a recall could be issued at any time while the dealer has a vehicle in inventory) goes up significantly. And when risk goes up, your trade value will go down.

Again, it is important to get outstanding recalls performed, and you can rest assured that every vehicle in CAR 1’s inventory has been checked for recalls and had them performed when possible. When the car they are purchasing has an open recall that cannot be performed because parts are not yet available, we also notify our customers of that fact, and follow up with them when parts do become available to help them get the recall work done by the manufacturer.

We do this not because it’s the law, but because it’s the right thing to do.

Chad D. Baus is a 4th generation auto dealer. He is a Co-Owner and the President of Sales for CAR 1 (www.buycar1.com).

Back to top