Bloomberg News

Automakers See Recalls Rise as Complexity of New Models Grows

March 05, 2014

A surge in new car models, increasingly complex technology and heightened regulatory scrutiny has led to more automobile recalls, particularly over safety concerns, a new study found.

More than 10 million vehicles were recalled last year because of safety-related issues, the most since 2009, according to the study of automaker and National Highway Traffic Safety Administration recall data by the financial advisory firm Stout Risius Ross Inc.

Ford Motor Co. and General Motors Co. (GM:US) together are introducing 30 new or revamped models in North America this year. As the number increases, the chance for increased quality issues also rises, Neil Steinkamp, a managing director at Stout Risius Ross, said in an interview.

“The challenge is to do that without incurring significant exposure related to warranty recall costs,” Steinkamp said yesterday. “I think we’re at a really fascinating point in the industry where the next year or two could be very, very interesting.”

Automakers on average order recalls on 54 percent of their models in the vehicle’s first year of production, according to the study. Hyundai Motor Co. (005380) ranked highest with 67 percent affected by recalls in the first year; Toyota Motor Corp. was lowest at 42 percent, the study shows.

GM Ignitions

The report comes as NHTSA investigates GM’s recall of 1.6 million cars over a defective ignition switch linked to 13 deaths in crashes. U.S. regulators are investigating why it took the company years to recall eight affected models, including 2005-2007 versions of the Chevrolet Cobalt, after learning about problems related to the ignition switch.

GM said key rings that are too heavy or jarring can cause the ignition to slip out of the run position, causing the engine to shut off and a crash-sensing algorithm to misfire and deactivate the air bags.

For the warranty study, Stout Risius Ross said it used NHTSA’s definition of safety-related vehicle components, which includes air bags, child seat parts, seat belts, brakes, steering, visibility, acceleration and wheels.

To contact the reporter on this story: Mark Clothier in Southfield, Michigan at mclothier@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


Hollywood Goes YouTube
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

Companies Mentioned

  • GM
    (General Motors Co)
    • $34.8 USD
    • 0.12
    • 0.34%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus