Stout's Automotive Recall Accelerator brings together unique and important news, analysis, and insights related to automotive recall and vehicle safety for stakeholders across the industry.

November 17, 2020

Recent Developments

The Maryland Department of Transportation Motor Vehicle Administration (“MDOT MVA”) has completed a ground-breaking vehicle recall notification pilot through registration renewal notices implemented through a grant from the National Highway Traffic Safety Administration (“NHTSA”). “The pilot program was designed to test the effectiveness of using a state process to notify customers of open vehicle safety recalls as part of the vehicle registration renewal process. The idea was to see if vehicle owners would be more likely to address a recall notice if it came from a trusted source – such as a motor vehicle administration. In the program, MDOT MVA partnered with Cox Automotive Inc. to identify open vehicle safety recall information. MDOT MVA printed the information on the regular registration renewal notices sent via mail and email about 60 days before a registration period ends.” Key findings included:

  • “MDOT MVA provided registration renewal notices for 4,295,324 vehicles, and among them identified 1,018,214 individual vehicle safety recalls. By the end of the pilot, 376,768 vehicle recalls had been remedied, or roughly 37%.”
  • “A total of 488,233 vehicles had at least one outstanding recall. Of those, more than 70% had one open recall; the remainder had multiple recalls.”
  • “Of the recalls remedied, 47.8% were at least two years old, indicating the program was effective in reaching older recalls whose owners may have been unaware of the recall status.”
  • For more information: MDOT MVA Completes Pilot Vehicle Recall Notice Program

Analysis

A recent large recall of vehicles with defective rearview cameras further informs our understanding of vehicle safety, technology and manufacturing risks for automotive components. Key observations from our review of the documents associated with this recall include:

  • There have been no reported field events or injuries associated with this defect.
  • The defect appears to have been identified through warranty claims submitted by dealers.
  • The defect may have involved an electronic circuit board design change implemented by the supplier. The recall remedy will be the previous design used by the supplier.
  • The manufacturing production impact of COVID-19 in early 2020 likely reduced the cost and impact of this recall: “Around the time this issue was identified, vehicle assembly plants were in the process of ceasing operation due to COVID-19. After resumption of vehicle production, suspect cameras were removed from stock, and cameras with adequate pin retention force were introduced into production.”
  • View the Part 573 submission for this recall
  • For more information: Ford and Lincoln Recall 2020 Models for Faulty Backup Cameras

Insights

The COVID-19 pandemic has negatively affected the automotive industry with declining sales and increasing costs. In this recent article, Foley & Lardner LLP notes that suppliers should consider the following if warranty claims are filed: limitations in court operations, vehicle manufacturer motive to increase financial performance, review of other vehicle manufacturer claims for expediated freight or downtime and the financial health of sub-suppliers that could be affected.

  • “The industry continues to face the double impact of declining sales and increasing costs, which has resulted in financial pain for both OEMs and suppliers.”
  • “Many automotive OEMs are seeking to offset their own declining performance on the backs of their suppliers. One tactic commonly employed by OEMs is to take a more aggressive approach in pursuing suppliers for historical, or otherwise questionable, warranty claims.”
  • “As the automotive industry continues to work through the challenges posed by COVID-19, suppliers are likely to continue seeing increased warranty claims from their customers. Effective management and response to such claims will be a key factor for supplier performance going forward.”
  • For more information: Foley & Lardner LLP | Managing Warranty Disputes in the Age of COVID-19

In early November 2020, NHTSA’s Office of Defects Investigation’s (“ODI”) released a Technical Report that describes in detail “…how recalls work, and how the public can quickly and easily find recall information and web portals.”

  • The ODI uses a four-stage risk-based process to identify and investigate potential defects as well as manage recalls that consists of: data collection, data review, investigation and recall management.
    • primary sources of information.” Information from manufacturers is collected in the form of Early Warning Reporting (“EWR”), manufacturer communications and foreign recall campaigns. The ODI also obtains information from other sources such as local governments, first responders, news media, vehicle safety organizations and private civil lawsuits.
    • “The second stage of the ODI processes is Data Review, a multi-step process during which ODI screeners analyze daily the data collected in the first stage, and ODI analysts and investigators gather and evaluate the evidence of a potential safety-related defect and assess the severity of the risk to determine whether to open an investigation.”
    • “The third stage of the methodology is the formal Investigation stage, during which an investigation takes place on a defined issue.”
    • “The fourth stage in the methodology is Recall Management, during which ODI’s Recall Management Division (RMD) administers the recall process, including the recall reports filed by manufacturers, the recall notices sent to owners, the free repair or other remedy provided under the recalls, and the overall completion rate of recalls (i.e., the percentage of affected vehicles or items of equipment that have been repaired).”
  • For more information: Risk-Based Processes for Safety Defect Analysis and Management of Recalls

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