Pub. 4 Issue 1

www.LSLCPAS.com Orange County (714)672-0022 Silicon Valley (408) 573-6360 Temecula Valley (951) 304-2728 Focused on YOU Focused on your: • Accounting • Taxes • Audit • Review • Bookkeeping • Internal procedures • Cash flow • Consulting services Donald Slater, CPA Automotive Services Partner donald.slater@lslcpas.com Mike Mangold, CPA Automotive Services Partner mike.mangold@lslcpas.com David Myers, CPA Automotive Tax Partner dave.myers@lslcpas.com Put our experience to work for you. Since the 1940’s we have provided a complete range of services to the owners of dealerships and other automotive related businesses. Two simple example policies would be: “the dealership will not sell any used vehicle subject to recall” or “when notified of a recall, the dealership will work with counsel and the service department to determine whether to offer the vehicle for sale, and disclose all recalls for vehicles we do decide to sell.” Dealers may also want to expand upon this policy to establish procedures to identify recalled vehicles prior to acquiring vehicles at auction or in trade—similar to the standard practice of checking the NMVTIS database, obtaining commercially available vehicle history reports, and running a KSR prior to acquisition. While this is yet another procedure to heap on to your used car department, doing so will give dealers insight into proper vehicle valuation, and can be helpful in deciding whether to acquire the vehicle in the first place. This will be particularly important if the dealership policy will be to avoid offering recalled used vehicles for sale. Since automakers are not obligated to pay compensation to dealers for used vehicle inventory subject to recall, and many recent recalls involve backlogged parts orders that may take months to resolve, a lot full of recalled vehicles can quickly become a burden on your flooring line. Dealers who decide to implement recall policies that involve checking vehicle recall histories and selling certain used vehicles subject to recall should properly disclose known recalls to consumers in writing (and obtain a customer’s signed acknowledgement of this disclosure in the deal jacket) in order to avoid potential accusations of misrepresentation. (See “Disclosing Recall Status” discussion, below). As discussed below, an employee with an internet-connected computer, iPad or smartphone handy prior to intake or retail sale may help successfully navigate this brave new world. How to Tell Whether a Specific Vehicle is Subject to an Unfulfilled Recall Unless franchised to sell the specific line-make, dealers have traditionally had limited options for finding whether a vehicle is subject to a recall, or (even harder) whether an outstanding recall issue had been remedied for a particular vehicle. Some automakers had long placed VIN-searchable portals on their websites, but the timeliness of their updates was in question. Others had phone numbers to call, but  ROCKY RECALL — continued on page 20