Do Recalled Vehicles Affect Dealership Valuation?
It’s no secret to auto dealers that recalled vehicles can negatively affect dealership valuation. Additionally, unfixed recalls may endanger auto owners and other drivers. Unfortunately for drivers as well as dealerships, there is a vast number of recalled vehicles in the United States.
There are 63 Million Recalled Vehicles in America
Currently, America is home to 63 million recalled vehicles. This means that one out of every four automobiles in the U.S. has an open recall on it. Recalled automobiles are located most densely in specific areas of the United States. Jeremy Korzeniewski wrote, “Nearly a third of registered vehicles in Texas have unfixed recalls, the highest percentage in the United States. Hawaii, Mississippi, Louisiana, and Alabama are the states with the next highest percentages.” He mentioned that, since the majority of recalled vehicles in U.S. are located in these states, it should come at no surprise that many of the Takata airbag recalls were reported in these areas. Most of the recalled vehicles in the United States include SUVs and minivans.
How Do Recalled Vehicles Affect Dealership Valuation?
Auto dealerships expect to deal with recalls occasionally. However, recalls really hurt dealership valuation when they are serious and happen in large numbers. The Takata airbag-recall phenomenon mentioned earlier is a good example of a recall situation that did damage to dealership valuations. The article The Impact of Vehicle Recalls on the Automotive Market says, “These cases (of serious recalls) commonly involve a large number of vehicles, numerous reports of severe injury or death, and extensive media coverage. These factors, along with reputation for quality, dictate how much damage a brand suffers from a recall.” Often, when a brand suffers, so does the value of the auto dealership that represents it.
An Automotive Expert Can Help Dealerships Affected by Recalled Vehicles
When serious auto recalls are made in large numbers, it’s wise for affected dealerships to have an automotive expert assess dealership valuation. A qualified auto dealer expert such as Kirk Kleckner can help dealerships increase in value and recover from the harm caused by recalled vehicles.