New GAO Report May Impact Automotive Safety and Recall Process

By Mike Rozembajgier

A new Government Accountability Office (GAO) report examining how the National Highway Transportation Administration (NHTSA) could improve the safety defect recall process for automobiles may have a major impact on auto manufacturers in coming months and years. The NHTSA study – which was conducted in the wake of a record number of vehicle recalls in 2010 – makes a number of recommendations, many of which revolve around improving recall communication and boosting NHTSA’s recall authority.

The GAO report finds that the major challenges facing NHTSA and automobile manufacturers when managing a recall include identifying and notifying vehicle owners; motivating owners to comply with notification letters; providing better information to vehicle owners and the public; using existing data to improve recall completion rates; and the lack of authority to require manufacturers to notify used car dealerships when a recall is initiated.

The GOA report goes on to make four recommendations for executive action:

• Modify requirements for defect notification letters to include additional information
• Provide consumers the ability search a recall database using their VINs
• Use recall data more effectively to identify risk factors that might be associated with lower recall completion rates
• Enhance the agency’s recall authorities

Considering the frequency with which automotive recalls are announced, NHTSA is under the spotlight as much as any manufacturer. As a result, NHTSA is likely to adopt all of these recommendations, as well as additional measures requiring vehicle owners to be notified of a recall through channels other than just postal mail (e.g., phone, email, etc.) and making www.safercar.gov as the agency’s primary method of communicating recall information to consumers.

There is also a lot of political and popular pressure to give NHTSA more power to regulate recalls that pose an “imminent danger,” not only to the owner or the driver of the affected vehicle, but others on the road as well. All this will probably lead to more recalls, so it is important to keep in mind that the most effective recalls are managed by manufacturers that prepare for a recall before it strikes. More than ever, well-practiced recall plans are a necessity.

If they haven’t done so already, every automaker needs to create a robust recall plan and know exactly how they will manage a recall should the need arise. In addition, proactively conveying a genuine commitment to consumer safety – even in situations where there is no imminent danger – is critical, both to reassure customers and satisfy regulators. Automobile companies should analyze their own past recall record to determine what recall management techniques have generated the best response rates.

Over-compliance and proactive recall action are now the standard against which all companies are being judged. Companies should consider taking the GAO’s recommendations to heart even before NHTSA adopts them as federal regulations. Adding extra details and tailoring the language of recall announcements to reflect recommendations in the GAO’s report is one simple way to make a recall more effective and stay in the good graces of the agency and consumers.

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