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Buying a car? You may want to avoid the newest models

Rick Newman
The Exchange
Profile view of the new Chevrolet Corvette Stingray ZO6 as it is unveiled during the press preview day of the North American International Auto Show in Detroit, Michigan January 13, 2014. REUTERS/Rebecca Cook (UNITED STATES - Tags: TRANSPORT BUSINESS)

If you want to stump a car buff, ask what the Acura RLX, Dodge Dart, Ford Fusion, Ford Escape and Mercedes-Benz SL roadster have in common. When there’s no answer, explain that all have been recalled for fixes during the past few months for problems that occurred early in the lifespan of the vehicle.

Auto recalls have gotten a lot of attention lately on account of the General Motors (GM) flap involving 2.6 million recalled vehicles with faulty ignition switches that can turn deadly. Yet that recall, which involves cars dating to 2003 and spans at least nine model years, is far from typical. More common are cars recalled early in their life, when the design is relatively new, as automakers work out bugs that occur when a model is first assembled.

Analysis conducted for Yahoo Finance by Stout Risius Ross, an auto-industry financial advisory firm, suggests more things go wrong with newly introduced or redesigned cars than with models that have been on the road for a few years. These findings substantiate what some consumer advocates have long suspected: It may be wise to avoid buying brand-new models and wait until a vehicle has been road-tested for a year or two. “The data we’ve analyzed indicates new-production vehicles demonstrate an elevated level of recall risk,” says Neil Steinkamp, managing director at SRR. “The risk seems to tail off after the first production year.”

The data are not definitive, because the government collects recall data in a way that makes a comprehensive analysis of all vehicles over all model years difficult. It can also be challenging to identify the stage of production — early or otherwise — in which problems occur, especially since some problems that lead to recalls aren’t discovered for years.

Not necessarily unsafe

It’s also important to note that a recalled vehicle, in general, is not necessarily less safe than any other. In fact, manufacturers eager to fix problems may be more attentive to safety and quality issues than automakers that resist recalls.

Still, there can be advantages to letting other buyers be the guinea pigs when a hot new model debuts. Data compiled by Stout Risius Ross shows that recalls of all types have increased sharply since the mid 1990s, as cars have become far more complicated, and safety and quality rankings such as those published by Consumer Reports and J.D. Power have become highly influential. A sampling of recall data since 1990 for the six biggest automakers — Ford (F), GM, Chrysler, Honda, Hyundai and Toyota (TM) — shows that, for 64% of vehicles, the first production year was subject to at least one recall at some point.

The data don’t reveal what the recall rates are for vehicles in later production years, but anecdotal examples suggest it is considerably lower. The Buick Enclave, for instance, underwent seven different recalls during its first two model years — 2008 and 2009 — and only one per year for the next three years. (Those figures represent the number of recalls for discrete problems, not the number of vehicles recalled, which is hard to determine because the data aren't broken down by model year.)

The 2001 Ford Escape — a brand-new, freshly redesigned model  — was subject to 11 recalls. The number of recalls for that vehicle declined all the way to zero in subsequent years. But when the Escape was redesigned for the 2013 model year, the number of recalls suddenly jumped to seven — for what was inarguably a far better vehicle than the model it replaced.

There was a similar pattern with the Honda Pilot, with seven recalls for the inaugural 2003 model, and a gradual decline to just one recall per year in 2007 and 2008, that vehicle’s final two years on the market. The number of recalls ticked up to two per year when an all-new model was introduced in 2009, and rose to three by 2011.

It’s not surprising that new vehicles rolling off the assembly line for the first time would have more flaws than those that come later. When an old model is redesigned or a new model introduced, automakers revamp assembly line procedures and enter into new deals with suppliers. There’s new technology as well. “When new components are used, the data indicate there may be an elevated risk of product failure or recall,” Steinkamp says. As the manufacturing process matures and real-world driving reveals problems, defects are fixed and subsequent vehicles become more reliable.

An unnecessary inconvenience?

For buyers, a higher recall rate for first-year models can be an inconvenience, requiring unscheduled trips to the dealer (though the manufacturer usually pays for all the work done under a recall). It could also reflect lesser bugs in newer models that are irritating but not serious enough to trigger a recall. The number of first-year problems could become more common, however, since automakers are picking up the pace of new-model introductions, to gain every edge they can in a brutally competitive market.

Car buyers, of course, often want the latest models, since they tend to have the freshest styling, latest technology and biggest "cool" factor. The sweet spot for buyers may be finding a model that’s trendy but in its second or third production year — which might also be a bit cheaper, since there’s no longer a first-off-the-lot premium. By the same logic, cars may be even more proven in later production years, though some start to look or feel dated by then. For somebody buying a used car, on the other hand, a later production year might be the best bet.

There’s one catch: It can be tricky figuring out which year of production a given model is in. Automakers often promote vehicles in their first production year as “all-new” or “newly redesigned,” which is the case now for vehicles such as the Nissan Rogue, Mazda3, Toyota Highlander and Chevrolet Corvette Stingray. But after the first production year there are fewer clues as to what year of its lifespan a vehicle is in. The current Ford Edge, for instance, dates all the way back to 2007, with some upgrades that arrived for the 2011 model year.

Car-research site Edmunds.com often includes dates of model changeovers in its vehicle-history reviews. Online auto forums or Wikipedia might include the info if you do a Web search for the vehicle. Crash-test scores at safercar.gov and iihs.org can be another indicator, since they are usually identical for all production years of a given model, but can change when a new model arrives. And of course you can ask at the dealer, if you trust they’ll tell you the truth instead of steering you toward the car they’re hoping to sell. But don’t expect them to tell you you’re better off waiting a year to buy.

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