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Precarious Rides: The World of Auto Recalls

In recent years, auto manufacturers have been plagued with expensive product recalls, along with the litigation and PR nightmares that invariably ensue.

Toyota Motor Co., for one, is still reeling from a slew of mechanical issues that have impacted its global operations during the last 3 years. In Oct. 2012, the manufacturer recalled 2.5 million vehicles sold in the U.S., citing potential fire risks, only to later announce a staggering $1.1 billion settlement in December to resolve lawsuits stemming from “unintended acceleration” mishaps in certain Toyota and Lexus models.

Surprisingly, the unintended acceleration recall, even in its enormity, ranks only sixth on the National Highway Traffic Safety Administration’s (NHTSA) top ten listing of the largestautomotive recalls of all time.

Clearly this doesn’t bode too well for consumer confidence or for the P&C insurance carriersextending coverage to these precarious rides.

A Manufacturer’s Compunction

Last year, another public relations crisis fell squarely on the shoulders of General Motors (GM), who, on Jan. 5, 2012, announced the recall of all Chevrolet Volts sold in the United States—about 8,000 vehicles in total. In addressing the Volt’s alleged post-crash fire susceptibility, GM plans to beef up the protection around the battery pack and initiate other changes.

According to GM executives, a federal probe into three fires in Volt battery packs following crash tests prompted the modifications, although the automaker had supposedly received no complaints from Volt owners.

NHTSA reported that a Volt battery pack had smoked and caught fire more than 3 weeks after a side-impact test where the car had collided with a pole at 20 miles per hour. At the time, GM insisted the Volt was indeed safe, asserting the agency “had not followed the [recommended] procedures for discharging the battery following a crash.” Had NHTSA officials followed the guidelines set forth by the manufacturer, GM contended, there would have been no incidence of fire.

See the related slideshow: Investigating Automotive Battery Explosions

Nonetheless, possibly fearing public backlash in the form of dwindling sales, GM pledged to make thousands of Volts safer, even though the repairs did not then qualify as an official federal safety recall—meaning the company was ostensibly under no obligation to act. The Volt recall involved adding several components, including: steel plates around the battery pack; a sensor to monitor coolant levels for the battery’s temperature controls; and a cap to prevent coolant overfilling.

Because no official federal safety recall had been issued, GM was able to continue selling Volts while it produced the necessary components.

One would have hoped that 2013 would bring a much-needed respite in the world of auto defects. Unfortunately for Honda, that has not been the case so far. After having the second-highest number of recalls for any auto manufacturer operating in the U.S. market, Honda announced last week that it will recall nearly three-quarters of a million vehicles for an airbag issue. Specifically, Honda has recalled 748,000 Pilot crossover Odyssey minivans sold in the U.S. and then another 29,000 sold in Canada.

According to a press release, Honda identified missing rivets as the culprit, explaining the deficiency could compromise the proper deployment of driver’s side airbags in the event of a crash.

At this rate, perhaps Nader will consider a follow-up to Unsafe at Any Speed. Let's certainly hope not.

 

 

Posted 4:31 PM  View Comments

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