Recalls and their costs

By: Adel Murad

Carmakers are faced with dilemmas of having to find immediate solutions to technical problems on a massive scale when they announce recalls for faulty functions.

But even when companies want to offer temporary solutions, they are prohibited by law.

That situation leads to problems of higher costs, to both manufacturers and car buyers and sometimes risk of injury to consumers.

A clear illustration of that problem is the recall of faulty airbags made by a Japanese corporation and sold to many manufacturers.

The companies that used these faulty airbags in millions of cars were required to find an immediate solution in Japan.

To avoid liability of exploding airbags, companies resorted to instructing dealers to disable front-passenger airbags and stick a warning to avoid sitting in the front seat and use back seats instead.

This remedy, however, was not applied in the American market because disabling airbags is prohibited by law. So, companies left the airbags in place until the recall and fix are done within a few months’ time.

But half-way measures have also been applied in the American market in other recalls, when these measures did not compromise safety.

GM requested that its customers remove extra weights from their car key fobs while waiting for a recall to fix defective ignition switches.

Some consumer organizations demand overhaul of the recall system to give better protection to consumers and induce transparency to companies’ practices.

Consumers sometimes are unaware of recalls and resort to trying to fix faults themselves and pay for the repairs.

Of course, costs also affect manufacturers especially when the work needed to rectify a defect is complex and the number of vehicles is high.

Toyota is estimated to have lost up to two billion dollars in one recall to fix defected acceleration mechanism prone to impair control of car speeds.

The problem affected 2.3 million cars in the American market alone.

The latest recall for airbags also affects millions of cars worldwide and their repair bill is likely to run into billions of dollars.

That is why carmakers try to avoid recalls before they happen through quality control and scrutiny of their suppliers.

What companies do not want to do is bungle their recalls or delay them, because in these cases the costs could be their customers’ lives.

______

Adel Murad is a senior motoring and business journalist, based in London.
Email: adel.murad@ntlworld.com

 
 
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