The Ramifications of Automotive Recalls

The 2000s has seen an onset of auto recalls, from Toyota’s 2010 mass recall to the GM Motors recall in 2014, where 28 million vehicles worldwide were reported to have faulty ignitions. If you plan to become a mechanic, there may be recall reparations in your future if you choose to work for a dealership which is affected by faulty vehicles.
Here are some recent automotive recalls:

  • 2014 – GM recalled vehicles due to faulty ignition which could stop the engine
  • 2013 – Ford Escape was recalled for engine fire
  • 2010 – Toyota Corolla recalled for sticky acceleration
  • 2009 – Toyota recalled 4.4 million vehicles due to an issue with unintended acceleration

Among the lowest recalled car makers since 1980 are Mercedes-Bentz, Mazda and Nissan. Despite the recent recall crisis, General Motors has actually fared well over the years with only a 0.65 recall rate for every car sold. Compare this to Hyundai, who totes a 1.15 recall rate, which means they actually had more recalls than functioning cars sold.

Reaction to a Recall

Recalls mean more jobs for those who are completing auto mechanic training. In the face of a recall, large dealerships must hire auto technicians to install and repair the defective pieces of the car. In the face of the 2014 GM mass recall, the largest U.S. dealer AutoNation went from hiring 400 technicians, to suddenly requiring hundreds more.
When a car has been recalled, the company has to make thousands of new parts to sell, and then car owners must take their car in to be repaired. In the meantime, car owners may be offered to drive leased vehicles, although the fact that these vehicles are from the same company can be worrisome.

Recalls Don’t Actually Harm Business?

While recalls do offer great opportunities for those graduating mechanic schools, it seems unlikely that there would be any positive aspects to a recall. General Motor’s 2014 recall has cost the company more than $3 billion in shareholder value within the first few weeks. The Toyota recall of 2010 cost the company somewhere around $200 million in lost sales worldwide. So then how could a recall not majorly affect business for a company? Sometimes, as with the case of the recalled Chevy Cobalt, the price of the vehicle went up when there were fewer owners. In other cases, the media frenzy that comes hand in hand with a recall does not actually impact public opinion as much as you would think. Reports have shown that car owners do not stop buying from these companies even through a recall, and public opinion wavers only for a short time.

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