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How recalls benefit car buyers

Auto Mechanic
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With a huge safety recall by General Motors (GM) drawing attention to a number of deadly car crashes, it may suddenly seem as if any car that’s recalled is a potential death trap.

Far from it. In reality, recalls have become a common part of the car-ownership experience and a sign that the safety system is working as it’s supposed to. There are more recalls than there used to be, in general, yet highway safety and the quality of cars have both improved considerably in recent years. “A recall notice should provide peace of mind,” says Ed Kim, vice president of industry analysis at forecasting firm AutoPacific. “It means the manufacturer or the government or both have decided there’s a defect in the vehicle and want to make sure it never causes an issue.”

The GM controversy seems to be an exception, which is now likely to cost GM several billion dollars in fines, lost sales, litigation and more. As CEO Mary Barra recently explained in Congressional hearings, GM knew of serious flaws in an ignition switch more than a decade ago — yet still used the switch in some of its most popular models. As the automaker gathered evidence showing the switch could slip to the “off” position while the car was moving and cause a dangerous crash, GM should have recalled every affected car and fixed the problem. For reasons that are still unclear, it didn’t. Now, several years later, GM has finally recalled 2.6 million Chevrolet Cobalts and other cars with the switch and identified at least 13 deaths caused by the flaw.

Lack of controversy

Most recalls, by contrast, are uncontroversial. In 2013, for instance, automakers recalled nearly 22 million vehicles — about 40% more than all the new cars sold last year. Virtually none of those recalls made headlines, or should have, since most involved a quick trip to the dealer for an inconvenient but routine fix, at the automaker’s expense. Toyota led the list with about 5.3 million vehicles recalled in 2013. Toyota also scored high last year in Consumer Reports and J.D. Power surveys, suggesting little or no connection between recalls and shoddy quality. If anything, a higher number of recalls might indicate a more vigilant manufacturer eager to correct problems.

The total number of vehicles recalled in 2013 by major automakers was the highest since 2004, according to analysis by Stout Risius Ross , an auto-industry financial advisory firm. Recalls were relatively uncommon until the mid 1990s, when they hit an elevated level and stayed there. That may reflect greater attention by regulators, but two other trends probably have more to do with it: a surge of new technology in cars and increased competition among automakers, aided by all the new information available to consumers on the Internet.

The digital revolution transformed automobiles from mechanical contraptions into rolling supercomputers reliant upon millions of lines of code. Throttle, braking, steering, transmission and many other systems have gone from mechanical linkages to electronic controls. That has improved performance, efficiency and safety, but also made cars a lot more complicated.

The Stout Risius Ross analysis, for instance, shows that about 20% of the recalls by big automakers in 2013 were for air bags — which barely existed 20 years ago and represent a huge safety improvement. About one-third of the 2013 recalls were related to electrical systems, which these days power seat heaters, automatic tailgates, sliding doors on minivans, video entertainment systems and other gizmos that once existed only on James Bond’s Aston Martin. Only about half of the 2013 recalls were for safety issues, with the rest involving problems car owners might notice — buggy interior lights, fuzzy digital readouts, weak A/C systems and the like — that wouldn’t necessarily cause anybody harm.

Eager to fix

Automakers are also more eager to fix problems than they used to be, largely because of widely publicized quality rankings that emphasize long-term durability, among other things. The value of used cars — which anybody can quickly calculate these days using sites such as Edmunds or KBB — has also become a more important factor in purchase decisions, giving automakers another reason to be diligent about fixing problems. “Engineers live and die by those J.D. Power scores,” says Kim of AutoPacific. “There’s been a huge emphasis on increasing quality during the last decade.”

There were obviously some exceptions at GM’s small-car division from 2003 to 2007, when the majority of the 2.6 million recalled cars were produced. That occurred during a time, of course, when GM was beginning to hemorrhage billions and was sliding into bankruptcy. Toyota went through its own quality purgatory in 2009 and 2010, when it recalled nearly 7 million vehicles for problems with floor mats and gas pedals that were liable to cause unintended acceleration. Toyota ended up revamping its quality control system as a result, something that seems likely to happen at GM.

Meanwhile, a few attention-getting recalls coupled with horrifying tales of deadly crashes obscures the fact that driving is getting considerably safer. The total number of traffic deaths in the U.S. peaked in 2006 at more than 43,000, and has since fallen by about 25% to less than 33,000. That’s due to life-saving new technology such as air bags and stability control, better seat-belt use, greater awareness of drunk-driving risk, and perhaps even more-aggressive recalls. Taking your car back to the dealer for a fix may be a nuisance, but maybe we should be happy for the invitation.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.

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