Motor Vehicle Safety Recalls: Trends, Patterns, and emerging Issues

This paper examines patterns and trends in motor vehicle safety recalls using a dataset based on 23.1 million vehicles registered in the UK between 1992 and 2002. A safety recall occurs when vehicle manufacturers call vehicles that have been sold and are in use back to their dealerships for safety-related remedial work. Safety recalls can be a strategic concern for car makers, having the potential to damage brand value, reduce stock price as well as resulting in significant direct costs. The data from this study show that the incidence of vehicle recalls is increasing—between 1998 and 2002 there was an average of over 120 recall incidents per annum in the UK, compared to less than 50 per annum between 1992 and 1994. Total numbers of vehicles recalled show no clear trend over time, but the absolute level of recalls year on year is very high: in the UK, 10.8 million vehicles were recalled during 1992–2002, representing 47% of all vehicle UK registrations in the period. Moreover, there are substantial differences in recall rates between different car manufacturers, suggesting that recall rates may be a useful indicator of process performance in the automotive design-and-production value chain. European and American producers have recall rates that are nearly three times greater than their East Asian counterparts. This paper concludes with some ideas that may explain these patterns and suggests an agenda for further research.