AutoNation Inc. will no longer sell any vehicle, used or new, with an open safety recall.
The new policy will be costly, AutoNation CEO Mike Jackson says, but it's the right thing to do for customers. Jackson declined to estimate the expense but noted that 5 to 10 percent of AutoNation's inventory would be deemed unsellable at any given time under the new policy.
"The recall situation for the U.S. auto industry is a black eye. It is a dysfunctional nightmare that the industry should be ashamed of, and customers are right to be angry and confused," Jackson said. "As part of the industry, we have to hold a mirror up and say, 'What can we do better as a company?'"
So six weeks ago, the nation's largest new-car retailer stopped selling vehicles subject to recall until the repairs are made. The vehicles won't be sold to retail or wholesale customers, even when they're old, high-mileage cars destined for the scrap yard.
Halting sales began manually, but AutoNation is using technology to automate it. Executives expect full automation by December. Once the bugs are worked out, Jackson says he will share data and technology with any dealership group that wants it at no cost.
While Jackson wouldn't estimate cost, a major part will be buying more vehicles to replenish inventory reduced by the lockdown of vehicles with open recalls. AutoNation will buy an additional 10,000 vehicles, mostly used, over the next few months and maintain vehicle stocks at that higher level, Jackson said. The company's normal new and used inventory is around 80,000 vehicles.
Jackson didn't make an outright pitch for the new policy to become industry standard. He understands that grounding vehicles with open recalls will cause considerable complications and expense for retailers and is practically impossible to handle manually.