Car recalls are out of control... why?

Plus, what it means for you

Hey, everyone — CDG Recruiting has a top-notch Corporate Controller/CFO on the West Coast who is looking for their next great gig in automotive.

- Worked across 15+ rooftops at one time.
- Expertise in strategic dealer group accounting.
- Experience with delving deep into P&L.

If you’re interested in this candidate, email Steven or click here to inquire.

—CDG

First time reading the CDG Newsletter? Subscribe here.

It’s been 10 years since two massive recalls shook the auto world: GM's ignition switches and the Takata airbag fiasco.

Remember when GM CEO Mary Barra had to testify before Congress over faulty ignition switches? That was just the start. Only a few months later, Takata's faulty airbags caused the largest safety recall in U.S. history, affecting 42 million vehicles and up to 70 million airbags (some of which still aren’t fixed).

The Big Picture

By the numbers: Automotive recalls are still high. For the last several years, more than 30 million people have been affected by recalls annually. That might seem low compared to the peak years of 2014-2016, but the last time recall numbers were under 20 million was in 2012. So far in 2024, we're already beyond that.

Data via NHTSA

So, why are recalls still this pervasive, even with “safer, more reliable” cars?

Last week, I spoke to an automotive recall specialist from BizzyCar, who told me that recall reporting has become more precise, which could be partially responsible for the increase. Many OEMs also have hair-trigger reactions to potential defects to save face and limit liability.

Plus:

  1. Many recalls happen because manufacturers don’t have a clear view of their suppliers, how they handle quality or their supply chains.

  2. Automakers are speeding up production to make up for COVID delays, which means fewer quality checks and more issues slipping through the cracks. OEMs then quickly initiate recalls, leaving suppliers frustrated and scrambling for replacement parts.

  3. Software-defined vehicles (SDVs) now have up to 150 million lines of code, making them more vulnerable to glitches and bugs. Sure, over-the-air (OTA) updates can save drivers time and a trip to the dealership, but sometimes OTA updates fail, and hackers can exploit unsecured connections.

But at the end of the day, recalls typically mean one thing for dealers and consumers: inconvenience.

Are you still relying on auctions? We want to help you get out of this costly co-dependent relationship and start saving an avg. of +$2,700 per vehicle acquired with AccuTrade. 

How? Tap into the stream of high-quality used cars that come through your service drive every single day. All you need to do is empower your team with a simple appraisal process that gives your customers instant, guaranteed offers.

Watch this demo to see how it works. Then, hear how the team at Germain Toyota has used it to avoid spending fees, shipping costs, and time at auctions for over 2 years. 🤯

The Pain Points

OEMs are pushing dealers to knock out recalls quickly, but that often means more profitable jobs get pushed aside.

A well-known dealer in the Northeast (30+ stores) mentioned his service bays are packed with cars needing minor fixes—like incorrect tire stickers—while higher-revenue repairs get put on the back burner.

Check out what I found on a Mercedes-Benz forum not too long ago:

Recalls also often have slimmer margins. Depending on the OEM's dealer reimbursement process, a job that typically pays two hours could be cut to one.

On top of that, dealers have little say over when or how many customers show up for recall work. One dealer shared how a fire risk recall notice went out, and suddenly, his service lane was overflowing. Customers showed up panicked, expecting immediate fixes, but with parts in short supply, staff had to juggle the chaos.

The fallout? Angry customers, stressed-out employees, and no one happy.

Behind the scenes: Technicians are getting fed up with the recall grind too. These jobs don’t pay much and can be painstakingly slow. Take the Acura engine recall, for example, which comes with a 96-page manual. Messing up even one step can mean starting over. To keep their techs motivated, some dealers are digging into their pockets to pay rates differentials, even if it means taking a hit to the bottom line.

The biggest gripe for customers? Mixed messages. Sometimes, they get urgent letters saying, “Don’t drive your car — it’s a safety risk!” They rush to the dealership, ready for a quick fix, only to find long waits, no parts, or a “come back later” message. It feels like a bait-and-switch, leaving them wondering, “If it’s such an emergency, why aren’t they prepared?”

The Opportunities

Dealers I’ve talked to say recalls aren’t just a drain — every recall visit is a chance to offer added value. 

  • These customers might have defected to aftermarket shops for routine work, but they can’t go anywhere else for recall repairs.

  • By focusing on customers who bought their cars several years ago and are now out of warranty, dealerships can use an open recall as a hook to get them back in the service drive for a positive experience.

  • By offering a discounted service package, trade-in evaluation, or some other incentive, recall visits can create revenue streams and inspire loyalty.

But it starts with better communication. Traditional mailers are expensive, slow, and often miss the mark, sometimes arriving too late. Automated texts and AI tools can take over, managing parts inventory and instantly notifying customers when parts are ready and service bays are open. No overloaded service departments, no frustrated customers. Win-win.

Looking ahead: When the NHTSA proposes new safety rules, automakers are under pressure to adapt. Whether it’s about pedestrian safety, tougher crash tests, or emissions, these regulations mean they’ve got to tweak designs, update features, or overhaul tech to stay compliant.

And if cars don’t make the cut? Recalls. Some brands might even get ahead by recalling models early to avoid a bigger headache later.

Bottom line: Automakers need to sharpen quality control and keep a closer eye on suppliers. Dealers can use recalls to win back customers with great service. And for drivers, paying attention to recalls isn’t just about safety—it’s about pushing the industry to do better. The future of recalls will depend on who’s willing to address the root causes, not just the symptoms.

Visionary dealer: Winning in a saturated market with 9 dealerships!

You can stream the full episode now on YouTube, Spotify, or Apple.

Bring a Trailer king: The largest seller of interesting, odd and weird cars in America!

You can stream the full episode now on YouTube, Spotify, or Apple.

We’ve got tons of great jobs hitting the CDG Job Board right now:

Looking to hire? Add your roles today—it’s 100% free.

🚨Hey you! Before you go…

Did you like this edition of the newsletter?

Tell us what you think - it's the only way we get better.

Login or Subscribe to participate in polls.

Thanks for reading. See you on the next edition…

—Car Dealership Guy

Want to advertise with CDG? Click here.

Want to be considered as a guest on the CDG podcast? Right this way.

Want to pitch a story for the newsletter? Share it here.

Reply

or to participate.