Keeping Reacquisitions from Taking a Toll

2Keeping Reacquisitions from Taking a Toll

Buybacks are among the most complex business processes automakers face. To maintain and even boost customer loyalty, as well as minimize the impact on bottom lines and internal staff, automakers should focus on two areas: finding ways to identify vehicles that are accumulating repair attempts or days out of service and resolving these customer issues early, and increasing efficiencies when complaints lead to buybacks.

Background

3Keeping Reacquisitions from Taking a Toll

The best way to keep buybacks from taking a toll on business is to create processes using warranty repair data that can identify customers who may be at risk of wanting to abandon the brand and find resolutions to customer complaints early and keep the focus on customer service. Instead of relying on standard contact center practices, automakers should find ways to identify these at-risk customers before a repair history can be established and a “lemon law” claim made and then employ a structured case management approach to the situation.

The first step involves developing criteria and using advanced data analytics to determine which customers are in need of special attention and escalate them to a specially-trained, dedicated team. These representatives can then reach out proactively, working closely with the customer, dealer, and technical staff to find a resolution. This intervention often includes expediting the repair and walking customers through the process to ensure they feel fully cared for. In some cases, additional options for resolution may be necessary. These can vary depending on the issue, the number of times the customer has experienced the problem and brought the vehicle in for repair, and the options each individual automaker is

able to provide. They may include an extended warranty, car payment reimbursement, trade assist, specialized service offer, and a wide variety of other avenues.

This holistic approach can help to reduce the number of buybacks an automaker experiences, and helps maintain – even increase – customer loyalty to its brand. As with any other industry, customers who feel well cared for when they have a complaint are more likely to speak highly of a company to friends and family, and to select that automaker again when they are ready to buy a new vehicle. In the age of social media, it is easier than ever for consumers to tell hundreds, even thousands of people about a poor experience with the click of a mouse. Fueling customer loyalty is more crucial than ever before – and providing a satisfactory experience is possible, even when dealing with a delicate situation.

Using Intervention to Fuel Customer Loyalty

4Keeping Reacquisitions from Taking a Toll

At each step, automakers should take care tomitigate legal risk and minimize the financial blow.

Even when a robust customer resolution program is in place, buybacks are inevitable, and they involve many complex processes.Managing the various steps involved requires extensive knowledge of the patchwork of “lemon law” requirements in each state. This includes the terms of the buyback. It is important for negotiators to strive for consistency while working within these state mandates as well as the automaker’s policies. At each step, automakers should take care to mitigate legal risk and minimize the financial blow.

Once the terms are agreed upon, the next stage is the vehicle surrender. Because dealer staff may not be as familiar with the process and may be juggling competing priorities, using dedicated transfer agents can help streamline this step. This includes meeting with customers in person to perform an inspection of the vehicle, complete with detailed photographs. In instances when wear and tear is deemed excessive or physical damage is present, they can even put the brakes on the transaction. These highly-trained, specialized personnel reduce the risk of paperwork errors, which helps assuage the customer’s grievance and maintain compliance with mandated transaction timelines.

Smoothing the Bumpy Buyback Road

5Keeping Reacquisitions from Taking a Toll

Now that the customer has been taken care of either by placing them into a new vehicle or providing them with their refund, it is time for the automaker to get to work trying to maximize their financial recovery from the buyback by getting the vehicle remarketed and sold at auction.

There are two primary steps that need to occur to make this happen. The automaker must be convinced that the vehicle is free from the nonconformity (defect) and that the title (ownership) has been transferred back into its name with any state applicable “lemon law” title brand.

The repair process may take place at the dealer where the vehicle was surrendered or, depending on volume, at a regional dealership. Regardless of where the service is performed, it should happen quickly and efficiently to minimize costly depreciation on the value of the vehicle. It is equally important to make sure the defect which caused the vehicle to be replaced or repurchased is finally repaired to eliminate any chance of another buyback.

As previously mentioned, the buyback vehicle cannot be resold until the title process has been completed. That is made more challenging by the various title regulations for states requiring branding as well as the inconsistency of processing times at various departments of motor vehicles.

Once the vehicle is repaired and title is branded and in the name of the automaker, it is time to send the vehicle to auction to remarket the vehicle and financially recover dollars spent to repurchase the vehicle from the resale.

But the buyback obligation does not necessarily end there. The majority of states have resale statutes or provisions within the ”lemon law” statute that require disclosure of the reason for the buyback to the subsequent or “ultimate consumer.” In addition, these provisions may contain statutory warranties that vary on length and coverage by state. Some states have reporting requirements and, in some cases, even specify the disclosure form or language that the form must include. The question for automakers is: how can they best mitigate any legal risk of reselling buyback vehicles, and how far does the liability carry with resale disclosure? What is their obligation in instances where the purchasing dealer wholesales the buyback vehicle to another dealer in a different state?

To reduce this risk, when possible the title from the dealer should be held until the vehicle is resold to a subsequent or ultimate consumer and appropriate disclosure is made and document(s) is received. A robust disclosure tracking system should be created to track the vehicle from auction to dealer, dealer to dealer, and dealer to the ultimate consumer.

The question for automakers is: how can they best mitigate any legal risk of reselling buyback vehicles, and how far does the liability carry with resale disclosure?

While automakers strive, and usually succeed, to build vehicles that are not only safe and stylish but also reliable, there will be times when customer complaints pile up. The good news is that there are some simple best practices automakers can use to avoid financial and legal risk while boosting loyalty.

As long as they are made whole, customers may forgive a vehicle that did not live up to their expectations, but they’ll rarely forget a poor customer experience. Automakers and customers alike benefit from early intervention techniques and a streamlined buyback process. Vehicle issues and the buybacks that often result from them are an unfortunate reality, but employing these strategies can also turn them into an opportunity.

Paving the Way for Positive Experiences

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