Tempted to buy a recalled vehicle? You’re not alone

Would you buy a used car that has had a recall? How about one that has had multiple recalls?

According to the Automobile Protection Association, Canada’s watchdog, you not only would, but you do – in large numbers.

“Vehicles are complex, and safety and product upgrade recalls are a foreseeable part of the ownership experience – not that different in some respects from the upgrades we expect for our electronic devices and computer software,” says George Iny, director of the APA. “[Usually] recalls occur before there are any deaths or injuries, often even in the absence of property damage – a risk has been apprehended.”

Mr. Iny cautions that not all recalls are created equal. Different manufacturers have different thresholds for issuing one. He notes Toyota likely hid more recalls than it issued for 20 years, as they accumulated a stellar reputation for reliability and safety. The sudden acceleration headlines changed that culture, and the hit to the company, while substantial at the time, did little lasting damage to their reputation. “Ford, on the other hand, issues recalls for problems that could be limited to cars assembled by one new guy on the night shift, apprehended before any vehicles had been sold to the general public.”

By his estimate, three Ford recalls might equal one Toyota recall. Manufacturers have different trigger points, and the nature of the recall is more important than the number.

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If you’ve found the used car you want to buy, how can you make sure it’s safe? Is a used car dealer obligated to make sure any recall work has been performed? The short answer is no. In the U.S., thousands of General Motors’ now infamous Chevrolet Cobalts and Saturn Ions are sitting on used car lots, faulty ignition switches still in place. Not only are they being sold, their price has actually slightly increased in the weeks since the massive ignition failures have come to light. Not by much – maybe 150 bucks on average – but these models are still rising and falling along normal resale curves. This fact is sure to punch the juice out of multi-million dollar lawsuits being filed arguing that owners will find themselves with white elephants on their hands.

According to Jim Hamilton, Legal Services Director for the Used Car Dealers Association (UCDA) in Ontario, the UCDA keeps their dealers informed, and their dealers know that a car that has had outstanding recalls performed is worth more, and costs them nothing. ”If you withhold material information at the time of sale, you are breaking Ontario law,” he notes. The rub? Getting that information from manufacturers can be frustrating. As a buyer, you must be vigilant.

“The stop-drive order on the 2013 and 2014 Chevy Cruzes that GM issued was critical. Those cars are not only on GM lots – they’re in used fleets. Yet I can’t get affected VIN numbers to tell my dealers.” The UCDA represents 4,700 dealers in Ontario; Hamilton notes that if he can’t get timely information from a manufacturer, he’s not sure how an individual dealer can. Hamilton sent me copies of his thank-you-for-contacting-us correspondence.

GM's ignition switch recall affects nearly 2.6 million vehicles, including the Chevrolet Cobalt. Approximately 235,000 of the affected vehicles are in Canada.

GM’s ignition switch recall affects nearly 2.6 million vehicles, including the Chevrolet Cobalt. Approximately 235,000 of the affected vehicles are in Canada.
Handout, GM

The bottom line? Do your own check. Transport Canada has lists of recalls available, but sometimes only specific VINs are affected. Dealers should be able to verify what recalls were addressed, and if they know about it, they are obligated to either fix it or tell you when you buy it. Manufacturers tell owners and their own dealers about recalls, but if you’re uncertain of the provenance of a vehicle, do some digging. Manufacturers argue that the media messes up the message, but frequently, it’s that same media that forces them to take responsibility. Consider that not long ago, insiders estimated about 10% of cars on the road were lemons. Today, that number is closer to 1% according to the APA.

As a prospective buyer, what warrants your attention? Dennis DesRosiers of DesRosiers Automotive Consultants sees little impact on resale value of cars due to recalls. In fact, in the cluster of bad news, many will keep their recalled vehicle off the market and the law of supply and demand kicks in: the fewer available of a certain model, the higher the price.

Mr. Iny suggests looking for patterns of repeated recalls, especially in the first couple of years of a new design. While it could be an indicator of faulty manufacturing or design, as the whole recall culture struggles for transparency, it could also show “a robust internal process and commitment to ironing out the kinks in an otherwise decent used car buy.”

We’re in the midst of an overhaul of how manufacturers are coping with admitting fault. The nature of our instant – and intense – media means slow responses aren’t going to cut it. That same media, most notably the U.S. newscast 60 Minutes, was rightfully blamed for the furor over Audi’s unintended acceleration “problems” but it still effectively iced the brand for two decades in North America. You can’t unring a bell, so manufacturers should see more upside in stepping up sooner rather than later, something GM is facing now, at astronomical hits to their financials as well as their reputation.

The uptick in recalls across the board in the wake of GM this year signals exactly that. Is damage permanent? Mr. Iny indicates that the Ford Explorer and the defective Firestone tires killed the halo around that vehicle. And, unlike the new Dodge Dart, you’ll never see a reincarnated Pinto.

And to think, that was in the good old days before the Internet.

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About Lorraine Sommerfeld