Despite record fines and recalls, U.S. auto industry remains resilient
Auto Industry, Auto Recalls, FCA, Fines, NHTSA
Senior Vice President of J.D. Power’s global automotive practice says that “the fact of the matter is, there is a plethora of recalls, and after a certain point in time people become numb to them. We have more recalls now than we have ever had and yet the industry is selling more than cars than ever.”
“Today, the cars are much safer, less polluting, modestly more fuel efficient but there is still a long way to go,” says consumer safety advocate Ralph Nader. “We’ve ceased to see just carelessness, ignorance and indifference. These are increasingly criminal acts, now prosecuted because there is no criminal penalty in the motor vehicle safety law,” he adds.
In the process, automakers have had to fire CEOs, overhaul corporate structures, rethink safety processes and expedite communication with regulators.
Business Professor at the University of Michigan Erik Gordon believes that massive investigations and recalls have been detrimental to the U.S. auto industry.
“Automakers have progressed from occasional, seemingly innocent mistakes and low-profile recalls to endless, high-profile recalls that resulted from decisions to save money, to cover-ups top-level executives blamed on lower-level engineers, to cover-ups suspected of going all the way to the top and claims of paying dealers to lie about sales,” Gordon says.
Detroit Free Press notes some of the most recent high-profile crises in the auto industry:
- In June 2013, the National Highway Traffic Safety Administration ordered the recall of 2.7 million Jeeps that were found defective and were “prone to fires due to rear-mounted fuel tanks,” only to be refused by Fiat Chrysler Automobiles CEO Sergio Marchionne. FCA finally conceded to “conduct a safety campaign for 1.56 million Jeeps to install trailer hitches for added protection, but still denies a defect exists.”
- In February and March 2014, GM recalled 2.6 million older-model year small cars due to “faulty ignition switches.” An internal investigation by GM ensues with CEO Mary Barra having to testify before Congress and GM setting up a victims compensation fund for fatal accident claims.
- In July 2016, FCA confirms being investigated by the U.S. Securities and Exchange Commission “for the way the automaker reports sales figures to the public in quarterly reports.”
Yet, amid the influx of said investigations and recalls, purchases from U.S. Consumers for new cars and trucks have been surging. In 2015, more than 17.47 million new cars and trucks were sold — a historical number — and sales continue to pick up this year as well.
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