How to leverage recall opportunities for added service revenue and used car acquisitions

Welcome to this week’s episode of Used Cars Weekly, the original CBT News show dedicated to bringing car dealers best practices and tips for the used car department, in-depth dealer interviews, hands-on dealership strategies, as well as vendor analysis. Today, host Jasen Rice, founder of Lotpop, is joined by Stephen Granger, founder and CEO of RecallRabbit. The pair take a deep dive into driving recalls to your dealership’s service lane, appraisals for possible trade-ins, and other used car department recommendations.

As inventory shortages continue to challenge car dealers, now is the time to drive more recall dollars to the service department and increase trade-in appraisals. Granger says that throughout the COVID-19 pandemic, his business has grown substantially. Car dealers today are constantly on the hunt for used inventory. RecallRabbit aims to help dealers find recalls within their DMS, that have high ROIs, and use those opportunities to increase periphery revenue; either by fixing the recall or trading up the customer.

Although used car prices are high at the moment, Granger says car dealers can help alleviate those costs by encouraging service visits when recall issues arise. Additionally, Granger says that RecallRabbit sees on average, 48% of the revenue generated for car dealers, is customer pay. This can be higher or lower depending on the brand, however, Granger says worst-case scenario, dealers are getting 40-45% customer pay over and above the warranty work.

For independent dealers that cannot handle recall work due to OEM constraints, Granger adds that this could be an opportunity for franchised dealers to form some partnerships and make the most of those recall opportunities. Partnerships like this can also help the independent car dealer with their recon costs.

Due to current shortages in parts, Rice asks if that has had any effect on recalls. Granger says that yes, across the board, parts are more difficult to get. However, he hasn’t seen it have a huge impact as long as the car dealer has good processes in place to effectively communicate with customers. If a customer is waiting on a part, this is an opportunity to reengage with the customer in other ways.

The goal here is to create an influx in recalls and service appointments, but car dealers also have to be strategic about their scheduling process, especially with rental car shortages. Granger recommends having a seamless process customizable to the dealer. Be transparent with the customer regarding the service timeline for their vehicle. This comes down to having high-performing service writers and BDC employees.

Rice and Granger end the conversation by discussing how recalls integrate with appraisals and trade-ins. By identifying recalls with high ROIs, dealers can target those customers and prepare their employees to earn opportunities.

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