US auto dealers seek compensation over recalled cars that cannot be sold image

Dealers are not happy at all about the massive recalls, as such safety campaigns inflict great costs over unrepaired cars on their lots, seeking protection from lawmakers.

As a recalled car cannot be sold until it is fixed, the dealers have to cope with lots of vehicles just sitting in their yards until the automakers address the problem. But the procedure may take months until the suppliers provide all the necessary replacement parts, thus lowering the vehicles’ value. While there are some makers that offer compensations, most of them are dropping the issue on the dealers’ back. As a positive example, Honda has prepared a compensation plan for its US dealers to ease up a bit the depreciation weight of the unsold cars.

“It’s a burden,” said Don Hall, CEO of the Virginia Automobile Dealers Association. “The manufacturers have successfully transferred this to become a global dealer problem.” Therefore, they are now seeking for help from the legislators to clarify the matter and Virginia and Maryland states have responded by passing bills requiring that dealers be compensated when used vehicles in inventory are grounded by manufacturers’ stop-sale orders, Automotive News reports.

The automakers are evidently opposing such laws, saying dealers are forcing to shift their costs onto companies. “You take on certain risks by being a dealer,” a government affairs executive at an automaker said. “They make money in lots of ways, but there are costs of doing business.” The dealers are now hoping more states to follow with similar bills, as more recall expansions are soon to be announced, especially over Takata’s faulty airbags.

Via Automotive News