Vehicle Recalls Research Articles

Vehicle recalls performance in an emerging market: Evidence from the comparison between China and U.S.

Abstract The past decade has witnessed a remarkable growth of automobile sales and production in emerging economies, with China developing into the largest global auto market since 2009. This paper focuses on an important but neglected aspect in these emerging markets, namely, vehicle recalls. The aim of this study is twofold. The first is to show that a significant difference exists in the number and volume of vehicle recalls between the emerging Chinese market and the established US market; the second is to detect whether this difference can be attributed to the initiator level (voluntary versus involuntary recalls) and/or the firm level (organizational ownership structure and nationality of the foreign partner in international joint ventures). To that end, we quantify the recall performance by means of 4 metrics: total number of recall events per annum (NRE), total number of units recalled per annum (NUR), average number of vehicles recalled per event per annum (NRPE), and recall rate (RR); for each of these, we benchmark the US market and assess the relative performance of the investigated market using a bootstrap method. The empirical results indicate that the recall metrics in the Chinese market have underperformed relative to those of the established market. This is extremely pertinent in light of the current “Going Out” policy put forward by the Chinese government, as subpar quality awareness hampers the successful access of Chinese automakers to foreign markets.

Modeling enablers of supply chain quality risk management: a grey-DEMATEL approach

PurposeThe purpose of this paper is to recognize and model the enablers of supply chain quality risk management (SCQRM) through an empirical study in the Indian automotive companies.Design/methodology/approachA systematic literature review was conducted to extract the key enablers of quality management (QM) and risk management in the context of manufacturing supply chains. A grey-based DEMATEL method was employed to identify and model the key enablers of SCQRM.FindingsThe results of empirical study showed that the effectiveness of QM and risk management systems for automotive supply chain is driven by a set of common enablers that could be employed for developing dedicated SCQRM systems. The common causal factors in the model such as the involvement of top leaders, inter-firm communication and strategic-level alignment between supply chain members on both these issues clearly state that there is a need for a broader policy at an early stage.Practical implicationsIt is crucial for the automotive companies to develop and implement structured systems for SCQRM keeping in view the impact of any unaddressed quality risk on missed production targets, vehicle recalls and safety hazards.Originality/valueThis study ascertains the key enablers of SCQRM with emblematic focus on automotive industry and identifies if there are commonalities in these enablers.

Automotive recall risk: impact of buyer‒supplier relationship on supply chain social sustainability

PurposeThe purpose of this paper is to examine the automotive product recall risk in terms of social sustainability performance and to evaluate the role of buyer‒supplier relationships in improving social sustainability during product recall crises.Design/methodology/approachA multi-methodology approach is used to empirically analyse the interrelationship between the proposed constructs and enablers of the buyer‒supplier relationship. Structural equation modelling and interpretive structural modelling are followed to analyse the data gathered thorough a questionnaire survey of 204 executives and interviews with 15 managers from the automotive industry.FindingsThe results of the study provide evidence regarding the impact of the responsible buyer‒supplier relationship on customer recall concerns and the social sustainability performance of supply chains (SCs). This study also leads to the development of a conceptual model, providing a relationship between the three key concepts used in this study.Research limitations/implicationsFollowing social sustainability principles, this study addresses the importance of developing strong, responsible relational ties with suppliers to reduce vehicle recalls or successfully recover from a product recall crisis.Originality/valueThis study contributes to the literature by providing theoretical and empirical insights for developing socially responsible SCs and confirming the role of the buyer‒supplier governance mechanism during product recalls in the context of the automotive industry.

The impact of autonomous vehicle technologies on product recall risk

Complex Advanced Driving Assistance Systems (ADAS) and Autonomous Vehicle (AV) technology are increasing the number of vehicle recalls. At the same time, financial risks resulting from extensive product recall events can severely affect vehicle manufacturers and their suppliers, exposing the automotive supply chain to business continuity, legal and reputational risk. However, these risk implications are under-appreciated by large segments of the supply chain. This study shows that product recall events are increasing in general but recall events associated with ADAS/AV technology form an increasingly large percentage of these recall events. Based on this analysis, we describe ADAS/AV-specific aspects of risk mitigation and present a multidimensional approach, combining production-centric risk mitigation avenues in the automotive supply chain with the transfer of residual financial risks via insurance. We find that this comprehensive risk mitigation approach benefits in higher transparency of total production costs and increased resilience of the automotive supply chain. Against the background of an increasing product recall risk resulting from the increasing automation and interconnectedness of modern vehicles, we therefore suggest a closer, more strategic cooperation between insurance companies, car manufacturers and automotive suppliers for the benefit of all parties.

Vehicle counting based on a stereo vision depth maps for parking management

Automated parking management systems provide convenience and efficiency, and such systems are increasingly being deployed in modern urban areas. To facilitate the crucial function of vehicle counting in several applications, we developed a novel mechanism for counting vehicles based on stereoscopic computer vision with depth perception. In this study, we first established depth maps of pairs of images captured using stereo cameras through a scene flow-based approach. Next, we designed a modified sigmoid function to change the histogram distribution in the obtained depth maps by using the disparity threshold estimated from a disparity calibration board. Then, we proposed a vehicle counting mechanism using the modified disparity histogram; this mechanism can be used to easily determine the presence of a vehicle. Consequently, we applied the proposed vehicle detection and counting method to a surveillance camera and used it to determine whether vehicles were approaching an entrance; this camera captured a clear photograph of each license plate, which was then used for automatic recognition. The proposed system was evaluated using nine sets of video data recorded in an indoor parking garage and an outdoor parking lot. The experimental results quantified our method’s high performance and robustness in vehicle counting. For the indoor parking garage, the precision and recall were 99.56% and 98.29%, respectively. For the outdoor parking lot environment, the vehicle counting precision and recall were 98.85% and 98.85%, respectively. Our method was able to avoid counting errors when distinguishing between closely spaced adjacent vehicles.

Institutional differences and integration difficulties

PurposeThe purpose of this paper is to examine how the location of a firm’s headquarters and component sourcing impact a firm’s responsiveness in a product-harm crisis in local market.Design/methodology/approachThe authors collected data on 1,251 vehicle recalls from 12 manufacturers, six in the USA, three in Germany, and three in Japan. All of the recalls occurred in the USA between 2002 and 2010. The time the product was first released into the marketplace was used as the starting point while the time the recall was initiated (if at all) was used to record the probability of the product recall over time. Specifically, a survival analysis with an accelerated failure time model was employed to examine the speed with which a product is recalled. The authors examined the impact of foreign composition using information provided by the American Automobile Labeling Act, which lists the proportion of each vehicle that is composed of domestic parts (USA/Canada) and foreign parts. Organizational characteristics (i.e. size, market share, assets, net income, and reputation) and recall size (i.e. number of affected vehicles) that might have an effect on time to recall were controlled for.FindingsThe authors found that firms headquartered outside the local market would take longer to issue a product recall than firms that were headquartered in the local market. Firm headquartered outside the local market can reduce the time taken to recall by sourcing parts from the local marketplace, rather than from abroad. Interestingly, even local firms are affected by the location of component sourcing, such that they take longer to issue a recall if they sourced parts from abroad.Originality/valueResearch in international marketing has examined the benefits of integration to firms, but has not studied the risks of integration. By highlighting the challenges of managing institutional differences and integration difficulties, the authors show that location of headquarters and the location from where components are sourced have an effect on firm responsiveness in product-harm crises. Further, the authors build on the global supply chain management literature that has shown the effect of upstream activities (i.e. foreign production) on downstream activities (i.e. product quality). Specifically, the authors show that upstream activities can not only affect product quality, but also the ability of firms to respond to those product qualities in a timely fashion.

Assessing the effect of government surveillance on firm supererogation: The case of the U.S. automobile industry

This study builds on prior research investigating the antecedents of firm supererogation. Examining vehicle recalls in the U.S. automobile industry from 1966 to 2010 reveals that surveillance‐based government enforcement programs can have widespread industry effects on a specific type of supererogatory action, firm volunteerism. Specifically, increases in government surveillance are associated with firms going beyond what is legally required of them by initiating voluntary product recalls for defects not covered in existing government regulation. Such effects are shown to be unique among surveillance efforts as other government enforcement activities, such as standards‐based regulation, are revealed to have a negative association with firm supererogation.

Deploying a Recall Mitigation Framework for Systems Engineering

This article proposes a novel safety framework for complex systems, called Recall Mitigation Framework, that assists engineering teams in identifying recall risk factors during the systems engineering process. Current frameworks do not address recalls for complex systems. A modified ISO 42010:2011 for identifying multiple stakeholders of complex systems is also proposed, as the current architecture is tailored for systems with only one stakeholder. Existing system engineering tools such as Failure Mode and Effects Analysis are incorporated to identify risks factors. To measure recall propensity of each recall factor, a new formula, called Recall Index (pRI), was also developed and applied in this research. Four activity phases are included within the framework: Stakeholder Identification, Data Acquisition, Statistical Safety Analysis, and Risk Review. Both the Recall Mitigation Framework and pRI are validated through a case study involving the engineering of a new vehicle model in the automotive industry. Use of the framework provided better insights to the engineering team by employing statistical methods to identify three predictive factors that influence vehicle recalls: fuel economy, warranty coverage, and crashworthiness. Managers in other industries can utilize this framework early in the systems engineering lifecycle to identify potential risk factors and prevent a costly recall campaign.

A vehicle recall index and the sales impact by type of recall

A vehicle recall index and the sales impact by type of recall

A vehicle recall index and the sales impact by type of recall

A vehicle recall index is created to measure the safety provided by a vehicle. Compared to J. D. Power's indices, the newly created index provides additional, useful information for consumers to use when buying a car. The importance of recall information is reflected in the negative impact on sales. The impact is measured using an event study methodology to evaluate the sales loss and time to recover from a major recall. The effect of two types of recalls is compared: 1) Toyota's unintentional problem from a defective gas pedal design causing injuries; 2) Volkswagen's intentional modification of the emission control unit to report false information resulting in no injuries. The model indicates that Toyota's sales declined for the subsequent five months, while Volkswagen's sales were affected for eleven months. The conclusion is that consumers responded more to the Volkswagen 'cheating' scandal in their purchase of a new car.

Discovery‐to‐Recall in the Automotive Industry: A Problem‐Solving Perspective on Investigation of Quality Failures

Several recent high‐profile product recalls raise the question of why companies take so long to recall defective products from the market. The recall timing decision is not a simple task, as companies constantly face multiple, often competing goals during the recall process. In this research, we examine variations in large automakers’ recall timing decisions after an initial report of a suspected quality failures. Drawing upon problem‐solving theory, we theorize about how five recall attributes impact discovery‐to‐recall, defined as the time between a defective product's initial discovery and its officially announced recall. To test our hypotheses, we assembled a vehicle recall investigation dataset from recall reports filed by the six largest automakers that sold passenger cars in the United States from 2000 to 2012. Results from event history analysis reveal that discovery‐to‐recall is longer for: (1) recalls that are triggered by external initial reports, rather than internal initial reports; (2) recalls that are attributed to suppliers, rather than automakers; (3) recalls that are associated with design flaws, as opposed to manufacturing flaws; and (4) recalls with more models involved. We also find that cumulative recall experience, measured as the total number of previous recalls, shortens discovery‐to‐recall. These findings improve our understanding of why the timing of vehicle recalls varies considerably at the individual recall level. They also highlight the value of problem‐solving theory in vehicle recall research, as well as quality management research.

Costly External Finance, Regulatory Regime, and the Strategic Timing of Vehicle Recalls

We examine how the timing of vehicle recalls depends on the regulatory regime and likely impact of adverse information on the cost of raising external financing. In particular, we argue that the passage of the Transportation Recall Enhancement, Accountability, and Documentation (TREAD) Act imposed reporting requirements on vehicle manufacturers that delayed the speed with which the National Highway Traffic Safety Administration (NHTSA) could launch defect investigations, and possibly also undermined its incentives to identify safety issues. We find that in the decade following the TREAD Act, firms delayed the timing of their recalls when they needed to raise larger amounts of external financing, compared to the previous decade. This type of strategic timing of vehicle recalls also suggests that, contrary to company statements and some internal investigations about recent large-scale recall campaigns, top management is typically aware of product defects.

The Volkswagen Scandal from the Viewpoint of Corporate Governance

Like some other crises and scandals that periodically occur in the business community, the Volkswagen (“VW”) scandal once again highlights the devastating consequences of corporate misconduct, once publicly disclosed, and the media storm that generally follows the discovery of such significant misbehaviour by a major corporation. Since the crisis broke in September 2015, the media have relayed endless details about the substantial negative impacts on VW, on various stakeholder groups such as employees, directors, investors, suppliers and consumers, and on the automobile industry as a whole.1 The multiple and negative repercussions at the economic, organizational and legal levels have quickly become apparent, in particular in the form of resignations, changes in VW's senior management, layoffs, a hiring freeze, the end to the marketing of diesel-engined vehicles, vehicle recalls, a decline in car sales, a drop in market capitalization, and the launching of internal investigations by VW and external investigations by the public authorities.

Toyota’s Slow Response to Manufacturing Defects Leading to Recalls: Result of Poor Communication Strategy

The recall of vehicles in the automobile industry is not limited to any particular company. Recalls most often have been attributed to defective parts supplied by tier one and tier two suppliers. Toyota, a world leader in the manufacture of automobiles, built on world class corporate brand and Principles known as the Toyota Way, and located in about 53 countries in the world, with most of its production taking place in the North America and Japan. Its Communication strategy leading to recalls has brought it into conflict with its customers and regulatory agencies. Toyota’s seeming departure from its core principles in the Toyota Way has also brought it into conflict with suppliers and affected its production. Answers will be sought for the following research questions: 1) Why with its Toyota Way, Communication became a challenge for Toyota? 2) What is the role of the Media, in Toyota’s issues of recall? A detailed literature survey was conducted for Toyota’s communication strategy. A dialectic inquiry was used to analyse the acquired data, from interviews conducted.

The Transformation of Auto Safety Regulation: Bureaucratic Adaptation to Legal Culture

Created in 1966 primarily as a rulemaking body empowered to force the technology of motor vehicle safety, by the late 1970's the National Highway Safety Administration (NHTSA) had largely abandoned its rulemaking mission in favor of the aggressive recall of defective motor vehicles. That first period adaptation was driven by devastating losses in pre-enforcement judicial review proceedings combined with enthusiastic judicial embrace of the agency's recall efforts. Congressional reaction mimicked the signals from the courts, and the Reagan administration's regulatory reform and relief programs of the 1980's further solidified NHTSA's revised agenda. Prodded by congressional mandates, beginning in1991, but largely of 21st century origin, NHTSA has returned to rulemaking in the last two decades, but in a largely illusory form. Rather than forcing new technologies, the agency has largely required the diffusion of existing technologies already in widespread use -- technologies that might well have reached universal deployment in the absence of the agency's rules. Recalls (which have no demonstrable effect on motor vehicle safety) have continued at increasingly high levels and have been combined with consumer information campaigns, the encouragement of state behavior modification efforts, and agency-industry agreements, to round out NHTSA's emerging model of cooperative regulation. Whether or not this strategy has substantial effects in promoting motor vehicle safety, NHTSA's accommodating posture has resulted in congressional and OMB approval and industry acceptance without litigation. This article describes the evolution of motor vehicle safety regulation and interprets the agency's transformation as an almost perfect adaptation to a legal culture skeptical of ex ante coercive restraints on individual or firm conduct and accepting of post hoc compensatory or punitive action when that conduct fails to live up to broad social norms.

A proactive vehicle recall: An efficient strategy preventing crisis

A proactive vehicle recall: An efficient strategy preventing crisis

THE EFFECTS OF AUTOMOBILE RECALLS ON THE SEVERITY OF ACCIDENTS

The number of automobile recalls in the United States has substantially increased over the last two decades, and after a record of over 30 million cars recalled in 2004, in the last few years it has consistently reached between 15 and 17 million, and in 2010 alone 20 million cars were recalled. Toyota's recall crisis in 2010 illustrates how recalls can affect a large number of American drivers and the defects connected to them can result in loss of life and serious accidents. However, in spite of the increase in public concern over recalls and the loss of property and life attached to them, there is no empirical evidence of the effect of vehicle recalls on safety. This paper investigates whether vehicle recalls reduce accidental harm measured by the severity of injuries in vehicle accidents. The results of our analysis show that if a recall for a new‐year model is issued, then the severity of injuries of accidents continuously diminishes during the first year after the recall, something we do not find among cars not subject to recalls. This is because defects are repaired over time but also because drivers react by driving more carefully until the defects are fixed. To minimize the losses attached to having dangerously defective cars on our roads, both quick and timely recall issuance are needed and more detailed information on defects should be delivered to owners of defective vehicles. The latter can be made possible through simple but important policy changes by the U.S. government regarding recall information sharing with drivers and insurance companies. (JELL51, L62)

Do vehicle recalls reduce the number of accidents? The case of the U.S. car market

AbstractThe number of automobile recalls in the U.S. has increased sharply in the last two decades, and the numbers of units involved are often counted in the millions. In 2010 alone, over 20 million vehicles were recalled in the United States, and the massive recalls of full model lines by Toyota have brought this issue to the front pages around the country and the world. However, there is no quantitative evidence of the effect of recalls on safety. Without that evidence, the government and insurance companies have been reluctant to request and use more detailed recall information to increase correction rates, and regulators have not studied the possible link between the growing number of recalls and the risk of life for consumers. In this paper we empirically quantify the effect of vehicle recalls on safety using repeated cross‐sections on accidents of individual drivers and aggregate vehicle recall data to construct synthetic panel data on individual drivers of a particular vehicle model. We estimate the effect of recalls on the number of accidents and find that a 10 percent increase in the recall rate of a particular model reduces the accidents of that model by between 0.78 percent and 1.6 percent when using the full sample of accidents in our data. We also find that recalls classified as “hazardous” are more effective in reducing accidents, and the recall effect is especially strong when we restrict attention to accidents that lead to personal injuries and only include vehicles more likely to be at fault for the accident, but much less so for accidents that only lead to property damage. We also find that vehicle models with recalls with higher correction rates have on average fewer accidents in the years following a recall, which indicates the importance of the role of drivers' behavior regarding recalls on safety. Our findings suggest that policymakers should consider, for example, policies to allow insurance companies to take into account recall correction behavior when pricing auto insurance, which could be made possible through regulatory changes by the U.S. government, and should revisit the complex trade‐offs between pre‐ and post‐market regulation in this important industry. © 2011 by the Association for Public Policy Analysis and Management.

Developing a creative inventive framework for strategic management and sustainable business excellence

Voluntary recall of vehicles, an established practice in automobile business, is viewed as indication of manufacturer's seriousness in maintaining highest levels of quality. Adopting creative (creative problem solving) and inventive (theory of inventive problem solving (TRIZ)) approach to look into the issue of recall (viewed as forced and not voluntary) of 8.5 million vehicles by Toyota Motor Corporation in 2009?2010, this paper attempts to develop fresh insight into the issue. A hybrid Flexi-TRIZ research and strategy development and implementation methodology is evolved, framework for strategic management and sustainable excellence – along with strategy implementation tool – created, and incorporation of 'flexibility', 'inventiveness' and 'purposefulness' – as new evaluation angles in Deming Application Prize examination – suggested. The study contributes to further development of total quality management philosophy.

An Exploratory Study on Motor Vehicles Recall in the US - Trend Analysis of Recalls Due to Commonality in Vehicles Design

Using product platforms and commonality in product design saves supply chain costs, reduces inventory. But commonality in design also leads to using same component or process across multiple products which can cause the larger scale of recalls in case there is a problem with the common component. The auto manufactures have been using commonality and different anecdotes show that these strategies have impacted auto recalls. This exploratory research studies the trend of recalls due to commonality strategies for 35 years since 1975 taken by 23 auto manufacturers selling cars and trucks in the US. The auto recalls data used in this study is provided by the US National Highway Traffic Safety. SAS PROC MIXED is used to model the trend of recalls due to commonality by the vehicle make. The trends are further explored to study and explain similarities and dissimilarities between different makes. The study shows that there are four distinct clusters of recall profiles among the auto manufacturers that resulted due to commonality and product platforms strategy. Specifically, it is found that the Japanese auto manufacturers have increasing rates of recalls whereas most of the Big 3 US auto manufacturers have distinctively decreasing rate of recalls arising from commonality and product platforms strategy. With the recent recall problems the auto manufacturers are facing, this research provides valuable insights about the trends and can create a wider stream of research that can explore the impact of commonality and the product platform strategies on vehicle recalls.