Vehicle Recalls

Vehicle Recalls

Automakers around the world are all facing a common problem; and it is not new to the industry. The problem is not how to pay back bailout money or how to sell more units during the credit crunch in the current economy. The common problems that these automakers are facing are recalls. What mandates a recall? “Definition: A recall takes place when a manufacturer notifies all owners of a specific vehicle of a condition or defect that could affect safety or safe operation of the vehicle.” (The New York Times Company, 2010). This problem is not just a Toyota problem but an industry wide problem. The alarmingly high rate of recalls is due to the government increasing the standards on automakers to produce safer products for the public. Vehicle recalls are becoming common place in America as more consumers report problems to the National Highway Traffic Safety Administration (NHTSA). With all of the recent recalls in the news most consumers think that vehicle quality has declined but that is not true. The reason for this consensus is that recalls are getting more attention now than they did in the past. “Currently the auto industry is on track to hit the national average of 164 recalls per year that are issued by automakers.” (Muhammed El-Hasan Business Writer, 2010). The number of automobile related recalls is a growing problem; the recalls are consistently issues that should be fixed before vehicles hit the market.

The amount of money and time it costs automakers to fix recalls after an automobile has been sold can be staggering. These costs include both parts and labor to repair the affected vehicles. This will also cost extra man hours and overtime to employers to repair these vehicles. There will be costs for providing transportation to vehicle owners while their vehicles are being repaired. There will be lawsuits from injured or killed vehicle owners and their families. There can be losses in revenue by reduced sales and decline in stock prices...