Selling a Car on Recall: What You Need to Know

What is a Vehicle Recall?

A vehicle recall occurs when a manufacturer identifies a defect or non-compliance with safety standards that could pose risks to drivers, passengers, or other road users. Recalls can be initiated voluntarily by manufacturers or mandated by regulatory bodies such as the Australian Competition and Consumer Commission (ACCC) in Australia. The goal is to fix the problem, which can involve repairs, replacements, or, in some cases, complete vehicle buybacks.

Effects of a Recall

1. Impact on Vehicle Value

One of the most immediate effects of a recall is on the vehicle’s resale value. Cars under recall often see a decline in market value. Potential buyers may be hesitant to purchase a recalled vehicle due to safety concerns, leading to longer selling times and reduced offers.

2. Disclosure Obligations

In Queensland, as well as other Australian states, there are legal obligations regarding the disclosure of recalls when selling a vehicle. Sellers must inform potential buyers if the vehicle has been recalled and whether the recall has been addressed. Failure to disclose this information can result in legal consequences and liability for any issues arising from the undisclosed recall.

3. Warranty and Repair Costs

If the recall involves significant repairs, the seller may need to address these before selling the vehicle. Some recalls are rectified at no cost to the owner, which can be beneficial. However, if the repair involves substantial work, the seller might need to weigh the costs of repair against the potential decrease in value.

4. Buyer Perception

Public perception plays a significant role in the sale of recalled vehicles. Buyers may assume that a recalled vehicle is inherently unsafe, regardless of the nature of the recall. This perception can create challenges for sellers in building trust and justifying the sale price.

Examples of Notable Recalls

Takata Airbag Recall

One of the most infamous recalls in automotive history is the Takata airbag recall. This global recall involved millions of vehicles equipped with defective airbags that could deploy unexpectedly, causing serious injury or even death. The complexity and scale of this recall have had lasting effects on manufacturers, dealerships, and consumers alike.

Ford Explorer Tyre Recall

In 2000, Ford recalled the Explorer SUV due to concerns about tire blowouts, which were linked to a number of accidents and why we often refer to them as the Ford Exploder. The recall involved the replacement of Firestone tyres that were found to be prone to failure under certain conditions. This situation severely impacted the resale market for the affected vehicles, creating a significant drop in value.

General Motors Ignition Switch Recall

In 2014, General Motors faced a massive recall of vehicles due to faulty ignition switches that could inadvertently turn off the engine while driving, disabling power steering and airbags. This defect was associated with numerous accidents and deaths. The fallout from this recall included lawsuits and a tarnished reputation, which affected the resale value of the affected models.

Selling a Recalled Vehicle: Best Practices

If you find yourself in the position of needing to sell a recalled vehicle, here are some best practices to follow:

1. Check Recall Status

Before listing your car for sale, check its recall status using the VIN (Vehicle Identification Number). The ACCC provides resources for checking recalls specific to vehicles in Australia.

2. Address the Recall

If the recall has not been resolved, consider taking it to an authorised dealer for repairs. This not only makes the car safer but can also enhance its resale value. Provide documentation to potential buyers showing that the recall has been addressed.

3. Be Transparent

Honesty is crucial when selling a recalled vehicle. Clearly disclose any recall information to potential buyers and provide details about whether the issue has been resolved. Transparency builds trust and reduces the risk of future legal issues.

4. Set a Realistic Price

Given the impact of the recall on the vehicle's value, adjust your asking price accordingly. Research similar models on the market to determine a fair price that reflects the current condition and recall status.

5. Consult Legal Advice if Necessary

If you have concerns about liability or your obligations when selling a recalled vehicle, consider seeking legal advice. This can help ensure you comply with all regulations and protect your interests during the sale.