Toyota Recall and the Used Car Business

This post is by Guest Blogger Tommy Gibbs, President of Tommy Gibbs & Associates specializing in Leadership Skills and Used Vehicle Management. Tommy Gibbs has over 23 years experience as a New Car Dealer. Today, Tommy focuses on increasing dealers' used car business through unique and proven methods.

Never in our history have we seen a deal like this Toyota thing. It proves the point that I’ve been trying to make that you cannot hang your hat on your new car franchise and you cannot stock primarily your own brand. Any Toyota dealer that has mostly used Toyotas in stock has a tough hill to climb right now.

First, I don’t think there is going to be a run on the bank so to speak with Toyota owners wanting to dump/trade their Toyotas. Even if you’re a Toyota dealer you’re not going to see a lot of these people showing up at your door step. If they bought a new Toyota recently they may show up wanting the dealer to buy it back and that may be the biggest can of worms for the dealers to deal with.

Dealers who don’t have a Toyota franchise will not see these people piling up at the front door either. Most Toyota owners are going to sit tight. Overall they are happy with their product and just want to see Toyota get this thing handled quickly. They are a loyal bunch.
So, what to do if one of the recall vehicles shows up at your front door to be traded? “Walk softly, but be not afraid.”

Sure, any dealer should protect themselves a bit by hitting a used Toyota a little low, but this problem will get fixed and then new and used Toyotas will come back strong. It has been said that Toyota is rich in cash. If that’s true they can advertise and rebate to a point that they grab lost market share back. They have the power to convince the public that all is well.

I think the biggest problem for a non-Toyota dealer is that if they trade a “recall vehicle” then they may be at the end of the line for getting the vehicle fixed.

Do you remember when the sky was falling on SUVs and Pickup Trucks and gas prices went to $4.00 a gallon? Don’t you remember what happened after the panic wore off and gas prices settled down? I advised dealers not to panic and not to dump those SUVS and Trucks in the wholesale market even if it meant letting some of them sit past the 45-60 day mark. I think dealers may have to take this approach with used Toyotas that might be sitting on their lots. In other words, don’t panic.

Dealers have to be careful that they don’t let this recall thing affect their thinking on the entire Toyota brand. Dealers need to get the exact list of the recalled vehicles and make sure their managers know which units are affected.

If I had owned a Toyota store today I would let the public know that their used Toyota is still welcome at my store. If I were a non-Toyota dealer I would do the same thing but, would walk softly on promoting this as you don’t want to offend anyone by putting this Toyota thing in their face. I would probably hit most Toyotas I appraise a bit back of book realizing it may have to sit a bit until this thing gets sorted out.

Ok, that’s my take. Hope to see you at the NADA convention. I'll be hanging out at the vAuto booth, #1631. If you stop by and say hello I'll give you a free copy of my little book titled "The Little Used Car Book." It's full of tips and ideas that will help your used car business.
-Tommy Gibbs for Engelhardt & Partners Automotive Advertising