, which is 22 times the cost of the average recall over the past ten years). To put that likely $25-30B into perspective, the combined 12-month operating budget of Rivian, Lucid Motors and Mullen Automotive is only $14B, i.e., three full automotive companies could be run with only half of the waste from recalls in North America alone.
Conversely, the first half of 2023 is a vastly improved story. Recalls are on pace to be down 51% from the peak in 2020 and down 14% from last year alone. Add in that in the last 55 years there have been a skewed 32% more recalls announced from January to June versus the second half of the year suggests the industry is on pace for 25% fewer recalls this year.The next and obvious questions are who were the leaders and laggards of the major brands, and what’s behind the success of the leaders.
“Our continual product monitoring, backed up by advanced digitalization, means we are able to detect the tiniest deviations at a very early stage in the production process,” states Jason Hoff, Vice President of Quality Management at Mercedes-Benz Cars and Vans, when asked about the significant improvement in 2023. “We are well aware that each recall can often lead to our customers having to pay an unexpected visit to the service center.
All-in, CEOs recognize the need for reducing such non-productive spends during an uncertain economy, and not just because it’sto the CEO’s compensation. In a 2021 investor call, Jaguar Land Rover’s previous CEO, Thierry Bolloré, acknowledged that, “…the dissatisfaction of our customers was really detrimental to our natural volume … [and] the missed opportunities are massive. It’s more than 100,000 healthy sales that we could perform.” And then Land Rover finished dead last in J.D.