toy car on bills next to a calculator
Health & Safety

The Real Cost of Car Safety Recalls

There has been a good deal in the media recently about the troubles of Toyota and Honda. They’re two car manufacturers synonymous with high quality, safety and reliability. Toyota (including the Lexus brand) has had problems with sticking accelerator pedals in quite a few models in the US. And, it seems, worldwide, a software issue affecting the braking of the latest versions of the Prius. Honda has also been afflicted – malfunctioning electric window switches which could possibly cause a fire.

There are clear safety and quality lessons but doubtless there has also been much hype. New revelations every day; Japanese CEO’s apologising profusely on TV. It’s almost reaching the critical mass of the coverage that the January snows in the UK received – it seemed like some of the reporters were willing the UK to run out of grit with their minute by minute updates on stock piles.

The true cost of recall will not be fully quantifiable for some time. This will all cost a great deal of money, not only directly in correcting the problems on millions of vehicles but also in loss of future business. You may ask, how can such things happen? Surely there’s testing? Well, yes there is but when things are released on such a large scale, unforeseen issues seem to crawl out of the woodwork. This happens all the time for software – we’re so used to patches and upgrades to fix bugs that we don’t even notice.

Whilst consumer protection laws (like the General Product Safety Regulations 2005) can force a recall, it often doesn’t come to that. Many manufacturers these days take the initiative and voluntarily recall defective products.

The irony is that although Toyota and Honda have undoubtedly done the right thing in launching a product recall, their reputations are likely to suffer a great deal. For example, both the Toyota and Honda share prices took a bit of a bashing and sales took a dive.

Reputations take years to build and are so easily lost. Whilst the context here is product recall, the same can be said of service. Services can be delivered badly and have to be ‘recalled’ in the sense that they might have to be ‘fixed’ and repeated for a client. The short-term penalty for a poor quality service might be compensation, loss of custom or possibly prosecution. However, long-term, it erodes your brand reputation and ultimately your whole business.

It’s often said that the ultimate question on any customer satisfaction survey is ‘Would you use this company again?’ Customer dissatisfaction can happen despite best intentions. I guess it’s how you deal with it that counts. Trying to do the right thing must always be better than denial. As Kuato, the mutant rebel leader said: “You are what you do. A man is defined by his actions, not his memory” (Total Recall, 1990, Directed by Paul Verhoeven)

2 Comments

  • Rich

    i think toyota are stuffed – they dont stand a chance now – people wont buy their cars for years – i know i wont, i would be 2 scared – i mean look at all those news stories with the wrecked cars at the sides of roads and the smoke and the bodies and that – almost puts me off driving all together – sure that toyota boss went on tv and said sorry and i think he meant it – but sorry isnt going 2 make up for all the accidents and death is it – i dont think the americans will buy them anymore maybe other people but not them

  • Catherine

    I completely agree with the majority of this article and I have no doubt that consumer confidence in new cars from Toyota and Honda has taken a hit. However, I think their reputation has suffered specifically because it was so good to begin with, their names were (and I suspect, deep down, still are) synonymous with quality. I have no doubt that they will recover from this as long as they re-prioritise quality.

    From a more selfish point of view, I’m hoping to capitalise on the scandal by finding a brilliant, second hand car at a reduced price – fingers crossed!