Tuesday, January 4, 2005

Carmakers staggered by record '04 recalls

More than 30 million recalled cars and trucks dent quality image, bottom line.

By Jeff Plungis / Detroit News Washington Bureau

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-WASHINGTON -- Automakers recalled a record 30.6 million U.S. cars and trucks last year even as independent surveys showed automotive quality continued to improve, according to figures released by the federal government Monday.

The National Highway Traffic Safety Administration said there were 598 recalls last year, affecting 30,556,064 cars, pickups, minivans and SUVs. The previous record number of recalls was 541 covering 24.6 million vehicles in 2000. There were 527 separate recalls covering 19.1 million vehicles in 2003.

"It's pretty obvious the carmakers aren't out of the woods on quality yet," said Joe Ivers, the partner in charge of quality and customer satisfaction at J.D. Powers and Associates, a market research firm.

Recalls are both hugely expensive for automakers and can hurt the quality and safety image of the vehicles and brands involved, as evidenced by the Ford Explorer-Firestone tire controversy 2000.

Experts blame the record number of recalls on a convergence of issues, including tougher federal reporting requirements, wider use of glitch-prone electronics and a proliferation of new model launches.

Still, Ivers said the recalls do indicate real problems in the affected vehicles.

General Motors Corp. recalled more than 11 million vehicles in 2004, including a campaign to replace tailgate cables in nearly 4 million Silverado and Sierra pickup trucks and a more recent decision by DaimlerChrysler AG to recall the Dodge Durango to fix a ball joint problem.

Honda Motor Co. recalled 1.4 million SUVs and minivans to prevent heat from building up between shafts in the transmission that could damage gear teeth and cause the transmission to stop abruptly.

"Manufacturers are fighting a pitched battle to convince people they've improved their quality," Ivers said. "The reality is that overall, things are getting better. But sometimes things have to get a little worse first."

Automakers may also be more inclined to recall vehicles more quickly to score better on independent customer quality surveys, Ivers said. J.D. Powers only records customer complaints about problems they've actually experienced, not problems they've just heard about. A recall notice doesn't count as a customer complaint, but a part that breaks before it is replaced would count, Ivers explained.

Industry experts said there is a greater sensitivity to potential automotive safety defects since the Ford-Firestone tire recall. Automakers have installed sophisticated, computer-based tracking systems in part to detect problems more quickly and in part to comply with the TREAD Act, the law Congress passed after an investigation of rollover deaths involving defective Firestone tires and Ford Explorer SUVs.

The law overhauled the way automakers and auto parts suppliers have to report problems to the government. Companies must now submit detailed quarterly accounts of safety problems covering all models.

NHTSA spokesman Rae Tyson said safety officials are not necessarily alarmed at the record number of recalls. Recall numbers typically fluctuate from year to year, Tyson said. NHTSA has not detected any troubling trends among the recalls, but the agency does believe automakers are detecting and moving to correct problems earlier.

"Vehicles are becoming more complex, which raises the likelihood that problems may arise," Tyson said. "Consumers may be the winners here because problems are dealt with quicker."

Almost 19 million of the 30.6 million vehicle recalls were prompted by NHTSA after an investigation or inquiry. The remaining 11.6 million vehicles were recalled by automakers voluntarily, without NHTSA involvement.

Another factor that is driving recalls higher is the growing use of common parts in an automaker's model line.

By sharing more parts across numerous car and truck models, automakers reduce engineering and manufacturing costs. But when a part fails, it generally affects more vehicles.

In November, GM was forced to recall more than 1 million cars and SUVs because they featured the same defective exterior lighting.

The Internet also is playing a role in the rising number of recalls. Problems that once struck a car owner as an isolated occurrence now pop up in chat rooms or even spur their own Web sites. It is much more difficult for a dealer to argue with a frustrated customer if he comes with stacks of similar complaints.

Eron Shosteck, spokesman for the Alliance of Automobile Manufacturers, said the computerized nature of today's cars means they need to be fine-tuned more often.

"All the surveys show consumers are more satisfied than ever," Shosteck said. "Quality is better than it has ever been, across the board and across all vehicle lines."

Even before last year's record-shattering number of recalls, the number of recalls had been high by historical standards.

Between 1968 and 1994, the number of recalled vehicles exceeded 10 million only three times. Between 1995 and 2003, the industry has recalled an average of more than 18 million vehicles a year.

David Champion, director of automobile testing at Consumers Union, said industry changes are leading to a rise in recalls. Under competitive pressure, automakers are accelerating the development of new cars and trucks to reach the market faster.

Champion said because of cost pressures, companies are engineering parts more quickly, sometimes sacrificing reliability and durability tests. The result is problems that might previously have been caught on the drawing board aren't showing up until the vehicles are on the road, Champion said.

Champion said he does not expect the number of recalls to fall in the immediate future. "It's an almost astounding number of recalls," Champion said. "It's good that manufacturers are reacting more quickly, but it's unnerving that there are so many problems occurring."

You can reach Jeff Plungis at (202) 906-8204 or jplungis@detnews.com.