The Probability of an Auto Recall

GM RecallTwo auto manufacturers have been in the news recently, Toyota and GM.  Toyota was fine over a billion dollars for not alerting regulators in the U.S earlier regarding their accelerator issues and product recalls by GM have been linked to multiple deaths in the U.S.  These incidences represent cases where manufacturers should have acted sooner but the cost delaying the recall has now exceeded the cost of keeping quiet (and not fixing the cars).  Not only should the manufacturers have acted sooner but the reality is that most cars are likely to be recalled over the course of their lifetime.  Mooweon Rhee at the University of Hawaii and I have been studying auto recalls over the past few years and we’ve calculated the probability that a vehicle will be recalled over its lifetime.  The chart below displays this probability, what it shows is that in the first year after a new car is released into the market there’s less than a 90% chance that it will be recalled but after 5 years on the market most cars will experience at least one recall.  The situation is a lot more pervasive than you think. (please click on the graph below to get the full resolution).

Recall Rates

 

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