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Recently, AutoNation put a legal and moral question to the test. Because of the decisions they made, they received a multitude of organic answers. None of those answers reflected well on the dealership giant.

Can dealership sell vehicle with recall? That was the question they forced an answer to in recent years.

Here, you’ll learn what happened during the AutoNation recall controversy and how you can use it to your advantage.

What Happened?

Simply stated, AutoNation decided to sell unrepaired recalled vehicles to customers. While there’s no current law prohibiting this practice, these vehicles contained dangerous defects. Recall safety issues can be a hazard to divers, passengers and other people on the road.

Some of these defects included faulty General Motors ignition switches and Takata airbags. These defects are a direct cause of thousands of deaths and injuries.

Manufacturers enact vehicle recalls for valid reasons. Dealerships can’t take them lightly. Technicians need to make recommended repairs before putting recalled vehicles back on the road.

AutoNation overlooked these risks by selling thousands of recalled vehicles to unknowing consumers.

USPIRG Report

According to the USPIRG report, nearly 20% of used vehicles sold at the Chrysler Jeep West in Colorado had unrepaired recall issues. A similar statistic held true at Hyundai Denver in Colorada, Honda Fremont in California, Chrysler Dodge Jeep Ram in Tennessee and Subaru Spokane Valley in Washington. At these locations, about 17% of used vehicles sold had safety recall issues.

Was it good practice for AutoNation to sell these vehicles knowing they were under recall?

At AutoNation, they claim that all of their used cars and trucks are worry-free. They boast about taking the risk out of purchasing a used vehicle. However, selling vehicles that have existing safety recall issues isn’t exactly worry-free for consumers.

The 2015 AutoNation Pledge

In 2015, AutoNation pledged that they would refuse to sell used cars and trucks without repairing all known recall issues. However, they walked back on this promise fewer than 18 months later. They began to sell recalled used vehicles on November 28, 2016.

AutoNation could have repaired the majority of recalled vehicles with their in-house service teams. There are ties to specific manufacturers within each independent AutoNation dealership. They have service departments with specialized knowledge of the manufacturer’s makes and models.

When a recall happens, vehicles get returned to the manufacturer’s authorized dealer for repair. This should have made it simple for AutoNation dealerships to complete the recall repairs before putting the vehicles back on the road.

In many cases, this never happened.

Legalities

The question is, was AutoNation’s practice of selling unrepaired recalled vehicles to consumers an illegal act? AutoNation says that it wasn’t. The current laws seem to agree.

However, every state prohibits a licensed dealer from engaging in deceptive practices. These include:

• Deceptive or unfair sales techniques
• False advertising
• Bait and switch
• Negligence
• Practices that cause wrongful death
• Violating implied or expressed warranties

AutoNation made a promise to consumers that they would only sell high-quality vehicles. Did they violate this promise by failing to repair their recalled vehicles? Can dealership sell vehicle with recall?

Unfortunately, it appears so.

However, USPIRG has made several recommendations about this situation.

USPIRG Recommendations

To the U.S. District Court, they’ve recommended relief for consumers by partnering with the Center for Auto Safety, and Consumers for Auto Reliability and Safety. They’ve asked that the FTC overturn consent orders for certain dealerships that allow them to sell unrepaired recalled vehicles as safe, repaired, certified or thoroughly inspected.

This request applies to AutoNation and other large dealers such as:

• Lithia
• CarMax
• West-Herr
• Koons
• Asbury

USPIRG wants the FTC to prohibit AutoNation and other dealers from selling vehicles without disclosing their recall status. This includes marketing used cars and trucks as worry-free when they are under recall.

To state attorneys general, they would like an investigation of AutoNation and other dealers who sell vehicles under recall. If the states find blatant violations, they would like existing state laws enforced to protect the public.

To AutoNation, they ask that the company honor its commitment from 2015 to not sell vehicles with unrepaired recalls. They also ask that smaller dealerships nationwide implement the same policy for the safety of motorists.

The Aftermath of the Recall Controversy

To clarify, AutoNation did not commit any crimes with its vehicle sales practices. However, often the court of public opinion has a bigger impact on a company than a criminal conviction.

CBS News Exposes AutoNation

On October 15, 2019, CBS News published a report about the sales practices of the company. This report painted AutoNation as a villain who purposely put the public at risk.

The report detailed issues about how AutoNation sold vehicles that they knew were unsafe. It talked about how their dealerships avoided making simple recall repairs in order to increase profits by a small percentage.

It also discussed how the problem remains unresolved throughout many AutoNation dealerships in the country.

This gave a poor impression of AutoNation to millions of American consumers. After all, it exposed, on a national scale, the company that touts its used vehicles as worry-free.

AutoNation disputed the report. They told CBS News that they hadn’t reviewed the USPIRG report, but questioned its accuracy. They claimed that their dealerships repair recalled vehicles if they have the parts available. They also claimed that they hold vehicles in storage if instructed by the maker. When they do sell vehicles with unrepaired recalls, AutoNation claimed, they do so with full disclosure to the consumer.

The Senate Steps In

Richard Blumenthal, Democratic Senator from Connecticut, is currently drafting legislation that will end the sale of cars and trucks with unrepaired recall issues. He says that full disclosure doesn’t suffice.

AutoNation’s stance is that it complies with all current regulations and laws related to recalls. They claim to have never deliberately or knowingly sought to mislead consumers into buying unrepaired vehicles.

Local dealerships have also piled on during the AutoNation controversy. Many have had harsh criticism about the practices of the large retailer.

To date, AutoNation’s stock price remains above $50 per share. While the stock has seen a small dip in recent days, it appears to remain stable at the moment.

What This Means for Dealers

How can your dealership stay out of trouble during this controversy? Are there ways you can use it to your advantage? AutoNation claims that it’s the system that’s broken. They don’t believe they are at fault or have committed any deceptive practices.

Selling Recalled Vehicles

Can dealership sell vehicle with recall? For now, it appears that the legal answer is yes. However, with the negative press AutoNation has come under throughout this controversy, it’s clear that selling unrepaired recalled vehicles isn’t the best practice.

Many local dealers have learned from this situation and are using it to their advantage. You can do the same.

Turn Recalls Into Profits

First, commit to selling repaired vehicles in all situations. Stay on top of the latest recall data from federal organizations such as NHTSA. You can also reference private data from companies like Recall Masters.

Be completely transparent with customers about recalls. Don’t wait for a customer to ask the question. Be up-front. Label repaired vehicles clearly so there’s no chance of confusion.

There are many ways you can use recall data to your advantage. Don’t hesitate to employ these strategies. They’re a great way to bring in new revenue.

The Curse and Blessing of Automotive Recalls

Every dealer and consumer should take automotive recalls as a serious issue. Can dealership sell vehicle with recall? Legally, the unfortunate answer still remains yes. Should you sell these vehicles to unknowing customers? The moral answer is a resounding no.

AutoNation has paid the price in the court of public opinion. Don’t put your dealership in the same position. Use recalls as a way of increasing revenue, but not at the expense of the consumer.