2023 Vehicle Recalls Set Near-Record

LIVONIA, MI – The U.S. auto industry saw a near-record 382 vehicle recalls affecting more than 33 million vehicles last year. 

Last year’s highest number of recalls since the record year 2014 is less a final assembly build issue and more a matter of defective parts from suppliers and new technology that doesn’t have all the bugs worked out.

So say participants in the Society of Automotive Analysts’ 11^th Annual Recall Summit.

“It’s a hot topic, year after year,” SAA President Steve Hallman says of  recalls.

He refers specificially to Tesla this month recalling nearly 4,000 of its touted Cybertrucks because of an accelerator pedal that can stick.

“The more we hear about that, the more it indicates things to come,” says Hallman. 

“How will new technology weather in this field? We just don’t know,” says Raymond Roth, director at Stout, an investment bank and advisory firm that tracks recalls.

“Recalls are costly and bad for business,” he adds.

U.S. automakers General Motors, Ford and Tesla spent $10 billion on warranty claims and recalls last year, $1 billion more than two years ago, according to industry data cited at the conference.

Some automakers are taking proactive approaches. For example, Ford has delayed shipping 2024 F-150s to dealers to make sure the pickup trucks undergo thorough quality checks to avoid potential recall and warranty issues.     

In the U.S., Honda in 2023 holds the dubious distinction of ranking first for a recall involving the most vehicles (2.5 million), says Stout. That matter involved a fuel pump problem. 

Electric vehicle maker Tesla was second last year with a recall affecting the most vehicles (2 million). It involved a software issue.

Despite those high numbers, most of last year’s U.S. recalls affected fewer than 10,000 vehicles that were less than three years old, according to Stout.

Recall issues can range from minor latch malfunctions to serious “don’t-drive” issues involving defective steering and braking and exploding airbags.

Automakers rarely take out recall insurance, says Christof Bontel, president-specialty casualty at insurance company Nexus.

Instead, they seek to push the cost burden down to suppliers, who may do the same in turn to their sub-suppliers, he says.

Based on attorney Jennifer Dukarski’s recall conference presentation, there may be a point to such hand-offs.

“Over the past five years there has been a pervasive failure to do proper quality checks in certain parts of the (supplier) community,” says Dukarski (pictured, below left).

“It’s not just Tier 1,” she adds. “It goes across the supply chain.”

Most of the offenders are Japanese automotive companies that inadequately do parts quality checks or go so far as to fudge data, she says. “It’s braking, steering, across the board.”

There are about 20,000 parts in a typical vehicle. 

Why would a supplier skimp on quality and durability testing when the stakes are so high?

Part of it is misguided cost-cutting and a desire to meet deadlines, Dukarski says. It can also involve company culture. “Someone blamed it on fear of speaking up if you see something wrong.” 

Even though compliance is important, “so many companies don’t have a compliance culture,” she says. In response, many automakers send out compliance checklists to suppliers “so they understand the risks.”          

“Not every recall is the same,” notes Neil Steinkamp, a Stout managing director. “There are differences in vehicle models, vehicle age, types of vehicles and the componentry.”

People with newer cars affected by a recall campaign are more likely to take their vehicles to a dealership to address the issue, according to Stout.

But some consumers ignore recall notices. Those are usually owners of older vehicles.

SAA conference attendees saw the results of two consumer surveys relating to recalls.

One was a Stout poll involving 1,000 respondents of mostly older vehicles. The survey centered on people who disregarded recall notices.  

When such car owners were asked why they didn’t take action upon receiving a recall notice, the most common responses were that they didn’t have the time to do so, they weren’t overly concerned or they lived too far from a dealership.

Some of them said they did a diagnosis of their car and decided it didn’t really need a recall inspection at a dealership.  

Ten percent said they didn’t follow through on a recall notice because they were planning to sell the affected car. “Buyer beware,” says Roth.

LexusNexus Risk Solutions did the second survey involving 2,000 people who purchased used cars from someone other than a franchised dealer.  

Even though many of those people bought their vehicle in a private-party transaction, 65% of respondents said they expected a communication from the car company that made the vehicle.

“I found that surprising,” says Michael Brodine, a market manager at LexusNexus. “They expect the OEM to know who owns the vehicle. They want to be talked to by the OEM.”

He adds that companies such as his can make that happen. When it does, “our analysis shows an improvement of plus-30% in response and repair rates for secondary owners.”