Trade-in Value Reduction from Open Vehicle Recalls Explored in Report

Jonathan Banks
Exec­u­tive Auto­mo­tive Anaylst
NADA Used Car Guide

A new report by NADA Used Car Guide stud­ies what would hap­pen if fed­er­al leg­is­la­tion were enact­ed gov­ern­ing what hap­pens after vehi­cle recalls. The “Used Car Safe­ty Recall Repair Act” pro­posed ear­li­er this year by Sen. Richard Blu­men­thal, D-Conn., was vot­ed down by a sen­ate com­mit­tee; but trade-in val­ues could be impact­ed if sim­i­lar leg­is­la­tion were enact­ed remov­ing all vehi­cles sub­ject to a safe­ty recall from the com­mer­cial mar­ket­place from the time deal­er­ships receive notice of a safe­ty recall until the recall is reme­died.

Here’s an assess­ment of trade-in val­ue reduc­tions asso­ci­at­ed with open recalls

Aver­age Trade-in Val­ue Reduc­tion of Recalled Vehi­cles Was $1,210:
Applies to vehi­cles stud­ied in analy­sis for recalls ini­ti­at­ed in 2014 to fran­chised deal­ers.

Aver­age Trade-in Val­ue Reduc­tion Sim­i­lar to Oth­er Recalls from 2010 to 2013:
How­ev­er, num­ber of vehi­cles impact­ed by recalls was sig­nif­i­cant­ly less for these years.

Deal­er-Sourced Cost Esti­mates Came from Sur­vey of 800 Fran­chised Deal­er Reps:
Includ­ed costs from ship­ping to out-of-brand deal­er, and stor­ing and insur­ing vehi­cle
wait­ing for repair.

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