steps to take on safety recalls

Every year, millions of vehicles are subject to safety recalls. A relatively small percentage of these recalls involve “stop operation” or "stop sale" notices. What steps should you take based on the safety recalls issued and vehicles involved? Potential steps to take are detailed below.

New Vehicles In Inventory or In Transit

The federal law governing safety recalls/stop-sales (49 USC 30120(i)(1)) provides that either notice of the stop-sale from NHTSA or directly from the manufacturer trigger the stop-sale compensation provisions under the law.  The stop-sale compensation under federal law, as you know, requires the manufacturer to either repurchase vehicles subject to the recall or compensate dealers with an additional 1% of the price they paid for such vehicles, per month, prorated from the receipt of the stop-sale notice until the vehicle is repurchased or the defect remedy is implemented.

Once any notice of an outstanding safety recall is received, federal law prohibits the delivery of impacted new vehicles until the recall is remedied.

Used Vehicles in for Service / In Inventory / Coming into Inventory that ARE of the Same Make as the Dealer Sells New

Federal law neither imposes an obligation on dealerships to know the safety recall status of used vehicles, nor prohibits the resale of used vehicles with outstanding safety recalls. However, it is recommended that used vehicles of the same make a dealer sells new be checked for outstanding, unremedied recalls (safety or emissions), since the dealership is authorized to do service or repair work involved. Important: If and when a dealership receives a recall notice indicating that certain used vehicles should not be operated and/or resold, they should not be operated or resold until the recall is remedied. 

Used Vehicles in for Service / In Inventory / Coming into Inventory that are NOT of a Make the Dealer Sells New

Again, federal law neither imposes an obligation on dealerships to know the safety recall status of used vehicles, nor prohibits the resale of used vehicles with outstanding safety recalls.  If you become aware of an outstanding recall that is NOT a stop sale – we suggest you disclose it to the customer and urge them to contact a dealer who can perform the recall work at their earliest opportunity.

However, we suggest you initiate a policy requiring that as soon as your dealership becomes aware that a particular “off-brand” used vehicle is subject to an outstanding, unremedied safety recall involving a notice stating that it should not be operated and/or resold that you not operate or resell the vehicle until the recall is remedied. 

Further information on safety recalls is available from OEM policy and procedure documents and from http://www.nhtsa.gov/Vehicle+Safety/Recalls+&+Defects.

K-208 and the Takata Airbag Recall

We do not believe you can pass the airbag on a vehicle subject to the Takata airbag recall when completing the K-208 form required on every used vehicle offered for retail sale by a dealer in Connecticut.  This would not apply to wholesale, auction or lease buyout vehicles as they are not being offered for retail sale.