The Eventual Outcome of Massive Defect Recalls: More Expensive Autos | DENENA | POINTS

The Eventual Outcome of Massive Defect Recalls: More Expensive Autos

In the wake of the 60 million vehicles recalled in 2014, there is one inevitable result for automakers and consumers.  The cost of cars and trucks is sure to rise, as automakers and parts manufacturers implement stricter safety measures.  These costs will be passed on to consumers via higher sticker prices and fewer incentives to buy new vehicles.  This occurs during a time where the auto industry is struggling and the margins for car dealers are shrinking.  In the quest for securing a consistent percentage of the market, automakers are often forced to choose between safety and affordability, or risk losing customers to a competitor.

Is Risk an Inherent Element of Affordable Vehicles?

One of the natural questions to arise is whether the only way to make affordable vehicles is to compromise on safety.  For example, as the 2014 recall numbers are evaluated, many auto parts manufacturers will be expected to increase their own safety inspection methods, which will add to the expense of the parts that go into vehicles.  However, this does not mean that the actual design and manufacture of parts will improve.  It seems like the money is better spent on research and development to create parts and vehicles that are inherently safer.  If the affordability of vehicles is directly related to low safety standards, then it is possible that the auto industry has been operating in a “false economy” for decades.

There is an expectation in the auto market that anyone should be able to buy a car, and the use of low interest financing, rebates and other incentives are a key part of convincing consumers that vehicles are affordable.  However, that may be changing as federal regulators take steps to increase inspection and defect repair rules, forcing automakers to increase prices on all vehicle types.

The Threat of Liability May Be Insufficient to Manufacture Safe Vehicles

The threat of liability has always been present as a means to encourage spending on manufacturing safe vehicles.  But in a very competitive marketplace where margins are slim, there is the temptation to cut corners, or even conceal known defects to save the expense of repairs and recalls.  Many parts makers are now saying the right things in response to the ignition switch and airbag recalls, but in truth they always had the option to make safer and more expensive parts.

Just like many product manufacturers, auto and parts manufactureres don’t change their approach until there is a financial incentive to do so.  It is naïve to think that these companies are proactively trying to make the safest parts and vehicles possible.  Their priority is to create a return for shareholders, and that often means selling a vehicle that is a compromise when it comes to safety.  When a defect is discovered, there seems to be an articulate strategy of concealing the defect and selling vehicles that are unsafe.  Only when injuries and deaths result are automakers motivated to increase their safety standards.