Study Shows Delayed Auto Recalls Appear in Clusters to Avoid Negative Attention
You may have noticed that when a vehicle recall is announced by an automaker, several others soon follow. Researchers suggest that this is not a coincidence. The study, “Hiding in the Herd: The Product Recall Clustering Phenomenon,” found that 73% of auto recalls are announced in clusters, indicating that there may be a pattern to the way in which automakers publicly disclose issues with their vehicles. According to the study, many automakers purposely delay announcing a problem with their vehicles and strategically wait until they can hide behind competitors’ recalls.
What is “Clustering” in Auto Recalls?
“Clustering” allows automakers to hide their recall announcement in a group of others so that it receives less negative attention — and the manufacturer can avoid their stock prices taking a hit. Generally, the automaker that initiated the first recall will be the one that is most adversely affected. The study found that the first automaker to issue a recall would see a 67% greater drop in stock prices than those who announced subsequently.
What Does the Auto Recall Study Say?
The study looked at 3,117 auto recalls in the industry from 1966 to 2013 and concluded that almost three-quarters were announced in clusters, the time period of which lasted approximately 34 days. During that interval, an average of 7.6 recalls would be issued.
Specifically, the researchers evaluated six of the major automakers with publicly traded stocks — General Motors, Chrysler, Ford, Honda, Toyota, and Nissan. Among the manufacturers, merely 9% were initiating recalls. Interestingly, the study also found that Toyota’s recalls were more random, with leading recalls accounting for 31% of the automaker’s total announcements.
The study reveals that auto manufacturers generally do not place owners’ interests or safety at the forefront once a vehicle is sold to them. In accordance with their findings, the researchers are calling on the National Highway Traffic and Safety Administration to require automakers to issue recalls once they are made aware of a problem — rather than wait until the recall can be announced in a cluster.
Does a Vehicle Recall Mean You Bought a Lemon?
If your vehicle was recalled by the manufacturer, it doesn’t necessarily mean you purchased a lemon. Recalls can be announced for any number of defects that could arise in a vehicle ranging from brake issues to faulty airbags and various other problems. In many cases, issues from auto recalls are repaired on the first attempt. Sometimes, a replacement part might be all that is necessary to resolve a problem that prompted a recall.
It’s essential to bring a recalled vehicle to the authorized dealership for repairs immediately. The manufacturer should fix the defect at no cost to you. While a recall doesn’t automatically make your car a lemon, you might have a stronger lemon law claim if the issue that led to the recall was the same that caused a problem with your vehicle — and your car satisfies the lemon law criteria.
When Does a Recalled Vehicle Qualify as a Lemon?
In order for your car to qualify as a lemon in California, it must have a defect that substantially impairs the safety or value of the vehicle which cannot be repaired after several reasonable attempts. Usually, four repair attempts are enough to establish that a vehicle is a lemon under California Lemon Law. If the vehicle’s nonconformity poses a serious safety risk to the driver, their passengers, and others on the road, only two repair attempts are necessary. A vehicle may also be a lemon if it was in the repair shop for a total of 30 days or more.
Importantly, recalls may arise at any time during your ownership of a vehicle — and repairs are typically made by the manufacturer without further questions asked. But to be eligible for a refund or replacement under California Lemon Law, the defect must have occurred while the car is still under the manufacturer’s warranty. Significantly, a car is presumed to be a lemon if the nonconformity arose within the first 18 months of the vehicle’s delivery, or before the odometer reaches 18,000.
How Do You Know If Your Car Has Been Subject to a Recall?
If your vehicle is part of a recall, the manufacturer should have sent you a notice in the mail. However, you can also check if your vehicle’s make and model was subject to a recent recall by entering the VIN on the National Highway Traffic Safety Administration website. The search option discloses unrepaired vehicles that have been affected by a safety recall within the last 15 years.
Contact an Experienced Southern California Lemon Law Attorney
Purchasing a lemon vehicle can be a significant hassle and inconvenience. A knowledgeable lemon law attorney can advise you concerning your legal rights and fight for a fair outcome in your case. The lemon law attorneys at The Ledbetter Law Firm are committed to providing dedicated representation to those who have purchased lemon cars to help ensure they obtain the maximum compensation to which they’re entitled.
The Ledbetter Law Firm helps consumers in Southern California who have purchased lemon vehicles obtain the refund or the replacement that they deserve from the manufacturer. With offices conveniently located in Los Angeles and San Diego, California, telephone and video conferencing options are also available. Call (310) 507-7022 to schedule a consultation with a California Lemon Law attorney today.