Dealer Alert

Recall Best Practises

With additional recalls and an increased shortage of repair parts, during the Pandemic, it’s important to review your selling practices.

Recent issues with respect to recalls include but are not limited to:

• Electric or Hybrid Car Battery Fire Risks
• Air bag inflation failures
• Computer Chip shortage for new cars
• Tire shortages (As we head into the winter season)

What does the VSA tell consumers about recalls?

A recall on a vehicle is a product quality or warranty issue between the consumer and the manufacturer. In general, recall oversight is a federal government responsibility. The VSA has recall resources on the VSA website, but the VSA website is not intended to be a comprehensive source of recall information

Should dealers and salespeople be concerned about recalls?

Yes. An uncorrected recall on a new or used vehicle is likely a material fact, particularly if it is safety related or limits usability in some way. Failing to disclose an uncorrected recall or providing incorrect information about recalls may be a deceptive act. An allegation of a deceptive act regarding a recall may be within the jurisdiction of the VSA. This may include recalls known to the dealer and not yet made public.

Who decides if a recall is material?

The position of the VSA is that if the problem is serious enough for a safety recall, that problem is likely a material fact.

Can I sell a vehicle with an outstanding recall?

Dealers may sell a vehicle with an outstanding recall, unless a ‘stop sale’ or ‘stop driving’ order applies. Dealers must use due diligence to identify outstanding safety recalls using available resources. Outstanding recalls for serious safety issues are material facts that should be disclosed on the sale or lease contract.

When must I sell vehicles with an outstanding recall as 'not suitable for transportation'?

If a recall would make a vehicle non‐compliant with the Motor Vehicle Act, then it cannot be sold until corrected. Or, it must be sold as 'not suitable for transportation'. You must document a not suitable for transportation sale with disclosures on the vehicle, the purchase agreement and in the advertising. Certain recalls include instructions for consumers to mitigate the risks until the Manufacturer/Dealership can complete the recall. Following these suggestions may not make the vehicle compliant in the Motor Vehicle Act and the Dealer may still be required to sell as 'not suitable for transportation' until the recall is complete and compliant with the Motor Vehicle Act.

What are the best practices with regard to buying or selling vehicles with recalls?

• Due diligence, full disclosure and good documentation are advised.
• Know where the recall was made, recalls in the USA may not be recalls in Canada.
• Know the full scope of the recall.
• Check with the manufacturer using the VIN.
• Government of Canada’s general recall website: Recall Website Link
• The US National Highway and Traffic Safety Authority: VIN Recalls
• CARFAX: CARFAX Recalls

Please ensure you are educating yourself and your teams on current recall issues for all new and used vehicles that you sell.