California Car Retailers Outrunning Recall Storm

California car dealers are bracing for the tsunami of new airbag fixes anticipated from the latest recall of nearly 34 million vehicles in the U.S. announced by Japanese supplier Takata and some of the affected automakers.

But don't look for the year’s sales surge in the country’s biggest market to wash away.

Brian Maas, president of the 1,100-member California New Car Dealers Assn., tells WardsAuto in a phone interview that sales of light vehicles through 2015 likely will top 1.9 million following the adjusted 1.85 million units sold in 2014, which in turn was an 8% jump over 2013 deliveries.

“The data doesn’t lie,” Maas says. “We had 64 million recalls (nationwide) last year, and in California vehicle sales went up. I think consumers, dealers, the market at large, are doing their best to assimilate these new facts about the recall status of vehicles.”

Recalls of models with faulty Takata airbag inflators made up 30% of the 2014 recall total, while vehicles recalled under General Motors’ ignition-switch issue represented 20% of the callbacks.

While the vast numbers of auto recalls may pose an expanding logistical nightmare for dealers, automakers and all the industry workers in between, they don’t seem to be scaring consumers from the marketplace.

The Toyota brand is No.1 in California with a 21.2% market share, followed by Honda (12.2%), Ford (10.1%), Nissan's (9.7%), GM (9.2%), Hyundai-Kia (7.7%), FCA US (6.6%), Volkswagen (4.9%), BMW (4.7%) and Mercedes-Benz (3.9%), according to the dealer association’s California Auto Outlook quarterly report.

The Golden State reflects the record-setting sales pace seen throughout the North American market, which analysis by WardsAuto suggests could surpass 20 million light vehicles this year.

The latest numbers show a seasonally adjusted annual rate of 17.71 million deliveries, which includes the 1.63 million units sold in May, the largest single-month tally since July 2005.

The number of vehicles included in all worldwide recalls of the Takata airbag inflators, which can explode during a collision and spray the vehicle interior with shards of metal, exceed 53 million since 2008.

The mishaps have been connected to six deaths and more than 100 injuries.

Takata recently revealed during congressional hearings many more of its suspect “batwing” airbag inflators may need to be replaced than the company previously indicated. That means owners of cars with inflators that were fixed but not switched out may need to go back to their dealers for entire parts replacements.

The latest recalled brands include BMW, Chrysler, Ford, GM, Mazda, Mitsubishi, Nissan, Subaru, Toyota, Honda and Acura, the latter two most affected by the defective Takata units.

All six deaths linked to the defect have occurred in Honda vehicles.

The expanding size and intricacies of the Takata recall have left industry experts predicting a significant downsizing in the regional market.

Regardless, Maas says, even as California dealers face an enormous volume of recalls – more than 100 million announced nationally since the start of 2014 through actions by Takata and other companies over other issues – their sales numbers continue to rise.

Informed Consumer a Return Customer

He suggests at least some of the credit for the state’s marked growth goes to consumers who not only appear not to be panicked over the recalls, but also are able to understand the recall process, keeping it in perspective.

In fact, Maas says, today’s consumers are much more informed about not only the buying but also the production of auto products, thanks to “the number of platforms available to consumers...starting with the dealers’ own websites to manufacturer websites to third-party websites to government websites. There are all kinds of opportunities for consumers to get as much information as they possibly can about repairing a recalled vehicle or purchasing a new car.”

Likewise, instead of anticipating contractions in the market, California dealers appear to be doing their best “to systematically address the concerns” of their customers and work through challenges they face with their suppliers, Maas says.

Dealers “have ramped up their staffs, they're answering phone calls...they’re doing the best they can with whatever information...and parts and procedures that are available.”

Dealers statewide are answering formal recall notices “as they’re announced, when they’re announced,” Maas says. But because climates along the West Coast generally are lower in humidity than those in other auto markets and thus pose less risk of triggering the kind of airbag malfunctions in question, California recalls may need to accept a back seat to recall actions in more pressing regions of the country.

That means Californian auto owners will face longer wait times for their recall appointments, ranging from several months to multiple years.

“That doesn't mean customers don’t have questions, that doesn’t mean dealers don’t have questions,” Maas says. “But because of the scale, it’s going to take time. People have to be patient.”

Topping the Tylenol recall of the 1980s, the defective Takata airbag actions now are considered the largest recall in U.S. history, so “everybody's scrambling...nobody’s ever had to address this on this scale before, particularly with products as complicated as vehicles,” Maas says.

By comparison, “you could pull Tylenol bottles off the shelves and not sell them” until replacements became available, he notes, but “here, you lose your car, how do you get to work? (There are) all kinds of societal ramifications for that.”

New-car dealers throughout the state have shown a knack for “responding to changing market conditions, whether caused by external events...downturns in sales...or in this case, dramatic recalls. The dealers will do their best to adapt,” Maas says.