Friday, April 11, 2014

Recallapalooza

Over the past several weeks, automakers have issued a large number of recalls.  The biggest news over the period of several months has been GM's ignition switch recall.  New GM head Mary Barra was required to testify before congress, and the company is under investigation.  The Wall Street Journal just posted a piece about the recalls that doesn't answer many questions.

As an auto enthusiast, I want to know what is going on with these recalls.  Why are so many happening?  Are companies issuing recalls in a fury while the public's attention is still on GM?  The WSJ piece cites a number of experts in the auto industry who suggested a variety of reasons.  Some experts said the automakers were being more proactive.  Others say it is in response to government auto regulators in various countries, and threats of huge fines and criminal prosecution.  Still, others suggest that the $1.2 billion penalty Toyota had to pay regarding the Toyota and Lexus unintended acceleration saga has scared the hell out of the other manufacturers.

There have been massive recalls from Toyota, Ford, GM, and others.  VW even issued a stop-sale of Passats, Beetles, and Jettas with the 1.8 turbo.  That is basically half of VW's lineup.

So, what is really going on with all of these recalls?  Fear?  Regulation?  Safety?

I don't know, but I think the result is going to be more expensive cars.  If manufacturers are going to get trigger happy on recalling their vehicles, they may start to raise car prices to include a "recall fee".  We won't see a recall-fee listed on the window sticker.  The price will just go up.  As ignorant as I am, there has probably been a recall fee built into vehicles for decades.  Now it will just go up.

The WSJ piece has a nice graph showing the number of recalls going up over the years.  Again, the question is, are vehicles built within the past few years lower quality, less safe, or have more defects?  Modern vehicle loans are being stretched out to 84 months and beyond.  These vehicles can easily reach 200,000 miles if owners kept them that long.  Powertrain and CPO warranties go up to 100,00 miles.  Modern vehicles are not hunks or rusting garbage, so why so many recalls?

If I had to guess about the cause of the current recall culture, I say it's the lawyers.





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