Why So Many Recalls?

Car industry are often targetted for a lot of bad flak, partially because car companies represent the pride of their originating nations and the media's reporting is often influenced by the reactions of diplomatic relations between different nations. For past year of so, the media have been driving a lot of fear into potential car buyers, with high profile and very frequent reporting of motor vehicle recalls. However in the grand scheme of all consumer product recalls, motor vehicles are hardly even in the top-3 most recalled product. But the average Joe-public is not going to realize that he is being manipulated by the media.

Let's look at some facts. RAPEX, the European Union's rapid alert system for notification of dangerous consumer products, including motor vehicles. It compiles statistics of product recalls on behalf of the European Commission. Reports of products deemed dangerous to consumers are then quickly disseminated to all EU countries to have these products pulled off the market.

Look at the charts below, excerpted from RAPEX 2009 report. We don't have the statistics for 2010 yet as the RAPEX 2010 Annual Report will only be released by May 2011.

Of course this data presented below is only applicable for EU market products. The reason I cite RAPEX is because of its transparency and compilation of statistics across different industries. In the US, product recalls are coordinated by CPSC (U.S. Consumer Product Safety Commission) but motor vehicle recalls are coordinated by NHTSA (National Highway Traffic Safety Administration) and there is no easy way to compare statistics across different industries.



According to the statistics, total recalls for motor vehicles actually dropped between 2009 and 2008. Toys have the highest rate of recalls. But Fisher-Price and Mattel attracted less flack from the media compared to Toyota. Does this imply that our society thinks that our cars are more important than our children? The negative reports surrounding Toyota almost predominantly originate from USA, where Toyota is seen as the beneficiarry (or cause, depending on who you ask) of GM and Chrysler's woes. As for the sudden acceleration issue surrounding Toyota and Lexus models, investigations into the case is now closed and no "smoking gun" was found, other than the earlier announced recalls for unsecured floor mats and stick pedals. Yes, Toyota was found guilty of covering up known issues and was slow to respond to safety related complaints. But nothing else other than these. The full report of the investigation can be found here. Yes there were also many other issues surrounding the design of Toyota vehicles, but I won't call it as a design flaw, it's just the mentality / culture in these companies to only give consumers what they want, not necessarily what they need. Anyway that's another topic of discussion.

Recalls have been increasing across all sector, not just cars.

Look at the chart above, product recalls have been increasing every year. But do not look at these on the surface and conclude that quality of manufactured goods are reducing every year and things are getting more dangerous to use. Even RAPEX is quick to caution against such conclusion and said in their report "The constant growth in the number of notifications over the past six years is due to an increased awareness and attention given to product safety by national authorities and the business sector, more frequent and more effective controls
of consumer products on the market and joint market surveillance actions carried out by national authorities." Yes recalls for cars got more frequent in past few years, but so are almost all other manufacured goods. So it is only natural that a proportional rate of increase of recalls is seen for the car industry, vis-a-vis other industries.

Even medical and pharmaceutical products, which due to their critical nature, are govern by a different body (FDA in the case of US), have seen an increase in recalls. So again, rise in recalls are happening across the board.

A quick check at Facebook pages of car companies reveal the PR challenge faced by car companies in issuing a recall. Honda Malaysia was the most recent car company to issue a recall, for its lost motion springs. And some Malaysian Honda City owners weren't too happy with the recall. Some even went on as far posting things like demanding Honda to provide them with lifetime warranty! I guess while everyone maybe born with a brain, but using it is optional. Some people are rather hard to please - if you are a car manufacturer, you uncovered a defect from your field technical reports, what do you do? Ignore it and hope that nobody finds out. But when the brown stuff hits the fan and the act of covering up goes public, people will throw a truck load of moral high ground accusations. If you do the right thing, make it public, absorb the replacement cost, the very same group of people who would otherwise give you that truck load of moral high ground rubbish will now say that you are selling them a lemon car and they want a replacement vehicle and threaten you with all sorts of things.

I blame it all on the policy makers of our country. Our regulations and consumer safety law enforcement, especially motor vehicle regulations, is such a joke that local consumers here are almost clueless about recalls. Consumers in developed countries would've been used to such things as it's a common announcement on newspapers and even on companies' official websites. People don't go on Internet forums and Facebook and criticize companies for issuing recalls.



Recall ads that you are not likely to see here.

Prior to Honda's announcement, only Proton has been honest enough to issue public recalls voluntarily, with large scale announcements on both print and online media.


This only means that Proton and Honda makes the worst cars in the country. All the rest of the cars, including Perodua and Toyota, are free from safety related defects throughout their entire production life. And if you believe that, come and speak to me because I have an unexplored oil field to sell you.

There may be some initial disappointment, but by and large educated consumers in a highly educated society are smart enough to know that they should be glad that they were notified of any known defects rather than being ignorant but blissful. Just because competitor model A doesn't have a recall doesn't necessary mean that model A is safer / better built than your recalled car. It just that you were not told. That's all.

To understand product defects, you need to first understand how goods are manufactured and why there can be no such thing as a perfect product. Every manufactured good is made according to a preset level of tolerance (i.e. panel gaps, temperature performance, vibration, paint thickness etc etc). Goods operating outside this present tolerance range are considered defective and will be pulled out of the line. No two single cars are exactly the same. Although mass-produced cars made by robots are of course closer to each other than hand-made cars. Which is why some people like the appeal of hand made classic cars. Of the total of 39 units of 1962 Ferrari 250 GTO (one of the most expensive Ferrari in the market) ever made, no two of them are the same. The aluminum bodies were hand formed and they are slightly different on every car. Funny how an out-of-specs design is an appeal when a Ferrari badge is on the hood but becomes a defect if a Rover badge is on the hood.

Exhaustive quality checks cannot be done on every single component, especially on a line that is churning out thousands and thousands of units each day. I am not saying that there are no quality inspection in factories, but what happens is that there will be quality gates at various points on the production line, to inspect on certain predetermined areas, sufficient torquing of critical nuts and bolts for example. Exhaustive checks, which take a lot longer can only be done randomly, where random samples are pulled out from specific production lots for inspections.

Defects can come from various sources, wear and tear of molding equipments and press dies for example, resulting in less than precise outputs. Raw materials from suppliers vary from time to time. Car assembly plants rely on suppliers to conduct their own necessary inspections although the assembly plant itself does randomly do exhaustive inspections on their own. It is not realistic to expect every single one of the tens of thousands of components that goes into every car to be inspected. There is always a statistical probability that defective goods can slip pass the net. Doesn't matter if you are making a car or a computer or whatever.

Defects can also come from design, but most of the time this is not because of an oversight by engineers, but rather due to time and cost pressure. In my opinion, the automotive industry has to deal with the most varied types of pressure but not many appreciate the complexity of it. No other industry in this world has to deal with the wide variety of regulations as the car industry. You have environmental laws covering end of lifecycle (ease of recycling / dismantling) and exhaust emission (CO2 and NOx) requiring expensive chemical type exhaust treatment (AdBlue for diesels, catalytic converters), electronic controls (combustion). You have health and safety covering volatile organic compounds for vehicle interior plastics and trims, specific labels for child seat use and airbag use, crash safety. At the same time consumers want it to look good, drive well, use minimum fuel but big and safe enough, and the biggest pressure of all - cost pressure. Consumers want it all these but they also want it CHEAP. And you need to solve all these problems within 5 years, the average lifecycle of a model. Toyota admitted that unrealistic development schedules has caused insufficient testing done on its cars and have since added an average 4 more weeks into their vehicle development lead time.

Source : PwC

To put this into perspective, Boeing or Airbus may manufacture more complex products. But don't redesign their planes every 5 years. Also, there are only 2 main competitors in commercial plane manufacturing business. And neither Boeing / Airbus engineers have to worry about designing the engines - that is taken care by Rolls-Royce, Pratt & Whitney or GE. The Boeing 757 was in the market for 23 years, before being replaced by the 747 in 2005. While designers of commercial airlines need to consider ergonomics of the flight deck, but criteria like "flying pleasure" of the pilot is not a consideration, neither does it have to look good, neither does it have to comply with minimum fuel consumption mandates and exhaust emission laws. Pilots don't demand iPod connectivity on their planes or automatic climate controls or electric powered seat adjustments.


And of course, they don't crash planes into mountains and expect its passengers to come out alive. But cars have to be crashed against a wall and its occupants have to be able to walk out safely. An airplane is meant to be operated by a highly trained pilot. But a car must accomodate that grandmother, her executive son, her racer boy teenage grandson along with his little sisters. When Jaguar developed its fancy JaguarDrive electronic control knob that rises to you, they had to make sure the thing still works after Coke / coffee is spilled on it and survive a dog chew.


Now Toyota have learnt that they are actually a lot of Americans who can mix up the brake pedal with the gas pedal. Boeing / Airbus doesn't expect its pilots to be that stupid. Of course, I totally appreciate the other far more demanding nature of the airline business and aeronautical engineering. I appreciate the depth of their challenge. But this serves the illustrate the far more dynamic / tight environment car companies have to work within.

Last year, the cheapest car in the world, the USD 2,500 Tata Nano was recalled for fire hazard. In about the same period, Ferrari issued a recall for its USD 240,000 Ferrari 458 Italia, also for fire hazard. Also at the same time, Rolls-Royce recalled the USD 250,000 Phantom for a brake fault.



The fire hazards are very extreme examples of recall issues. By and large majority of recalls are preemptive, with no reported incidences prior. Don't see any reason why your oh-so-common car should be exempted from recalls. Somewhere between the cheapest car in the world and the Rolls-Royce and Ferrari is your car. A USD 240,000 Ferrari cannot be perfect so why should your car that is not even worth as much as the Ferrari's titanium exhaust and carbon fibre bits should be expected to be perfect? And why would anyone get so worked up in finding out that their car was recalled. What's important is that a defect was found and corrected at no cost to you.

In the European Union, motor vehicle recalls are mandated under the European Commission Motor Vehicle Directive (MVD) law. While in US, it falls under NHTSA and in China, AQSIQ, while in Australia, it is under the Australian Competition and Consumer Commission (ACCC). None of these laws however specify when and how recalls are to be made. Unfortunately the laws don't specificy exactly how and at which point / severity of the problem that a recall can be issued. But it would be extremely complicated to define that specific of action. The law merely states that the relevenant national authorities must be notified of any potential recall issues. The onus falls on car companies themselves to identify the risk and issue a recall if necessary. Low risk defects can be corrected via Technical Service Bulletins (TSBs), where cars are rectified whenever they return for maintenance / warranty claims. In Malaysia, we have none of these laws. I would rather buy a Honda specifically because I know the company doesn't give double standards (one for developed markets with rigid laws, another for developing markets with weak laws) in its product safety policy, like some other car makers. In our market, you don't have the legal system on your side to protect your interest, your next bet is to go with a company who has proven itself to admit its mistakes, even if it is not required by law.

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