Why Are There So Many Car Recalls?

This past January, nearly 270,000 Lexus IS models built between 2006 and early 2012 were recalled because a nut holding the windshield wiper arm had been "improperly torqued" during assembly. If wiper motion was "restricted by an external load, such as a buildup of heavy snow," Lexus said, the nut could come loose and render the wipers useless. The company found no related accidents or injuries from this defect, and in six years, roughly only 0.009 percent of owners reported it. After identifying the cause, parent company Toyota issued the recall. Combined with another separate incident, Toyota kicked off 2013 by recalling more than 1 million vehicles.

Last year the National Highway Traffic Safety Administration recorded 586 safety- or compliance-related vehicle recalls. Although it was a slight reduction from 2011, the total number of recalls per year has been climbing for two decades. These numbers suggest sloppy production by carmakers, but data gathered by J.D. Power and Associates and Consumers Union, both of which track vehicle quality and reliability, show the opposite: steady improvement, year after year.

What's most surprising is that the government didn't directly demand these recalls. Roughly two-thirds of the recalls in 2012 were what is termed uninfluenced, meaning they were voluntary and not mandated by the NHTSA. That's right: For several reasons, automakers are acting earlier and more often in issuing recalls. Whether this is a beneficial development is debatable.

A Cautious New World

The automotive-recall landscape changed dramatically in 2000 with passage of the federal TREAD Act. Before that, federal law required that automakers issue a recall only when a consumer reported a problem. TREAD requires that companies identify potential problems and promptly notify the NHTSA. This has caused many automakers to act before the government's antennae vibrate. Although it's hard to argue with a bias toward safety, TREAD has had some unintended consequences. For consumers, the flurry of recalls appearing in the mail can cause confusion. For carmakers, forgoing a recall can lead to heavy fines, exposure to consumer lawsuits, and a tarnished reputation that damages sales. Yet fixing every potential safety issue can mean wasting valuable time and large sums of money.

Jim Hall, an auto industry analyst at 2953 Analytics, says carmakers are just being extra cautious. "The motivation is to avoid future litigation, mostly. The worst cost is if you're perceived as covering something up," Hall says. "Fixing a problem?especially if you already have a good reputation?is just perceived as doing things right."

No one questions the importance of recalls for serious problems. But on close examination, many recalls are for minor issues that might be handled at the owner's convenience and don't pose an immediate safety risk, such as replacing two pages of an owner's manual because the information is wrong, or a doorjamb sticker with the wrong tire-pressure recommendation.

"If anyone is being too aggressive about recalls," Hall says, "it may be Ford." For example, when Ford reflashed the MyFord Touch system last year, it issued a recall rather than a service bulletin, even though it wasn't clear that it was a safety concern.

Trending Up
In the past 20 years the number of voluntarily recalled vehicles has steadily grown. This is largely due to stricter laws, heavier fines, and more cautious carmakers. So-called uninfluenced recalls are instigated by the automakers themselves, while influenced recalls occur once the NHTSA has opened an official investigation.

Ben Willers

Ford had the highest number of recalls?24?of any automaker in 2012, but representative Kelli Felker says the decision to issue a recall rather than to take a lower-profile service action, which goes only to dealers, isn't determined by the relative cost. "It's always down to the safety," she says. "If it can affect safety, we're doing a recall."

In the end it seems that it's just safer for carmakers to err on the side of caution than to deal with any penalties?financial, reputational, or legal. Without admitting fault, Toyota has paid over $66 million in fines since 2010, after the NHTSA charged that it took too long to address problems with floor mats, accelerator pedals, and power-window switches. When we asked the NHTSA to comment for this story, it had this to say: "Manufacturers have an obligation to report defects in a timely manner and when they don't, as government regulators, it's our job to hold them accountable."

Since Congress last year doubled the maximum fine the NHTSA can impose on carmakers?from $17.4 million (as Toyota paid in 2012) to a maximum of $35 million per incident?carmakers will have an even greater incentive to issue more recalls more often. The upshot, however, is hazy.

Source: http://www.popularmechanics.com/cars/news/industry/why-are-there-so-many-car-recalls-15413366?src=rss

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