Recall System Is Still in Need of Its Own Fix; Roadblocks Hamper Efforts to Reach 100% Repair Rate

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Automotive News

December 8, 2017

Eric Kulisch

When Mark Rosekind became the nation’s top vehicle safety regulator in 2014, massive recalls of General Motors ignition switches and Takata airbags underscored the difficulty of notifying millions of consumers about dangerous defects and getting their vehicles fixed quickly.

Rosekind, who left his job running the National Highway Traffic Safety Administration (NHTSA) at the end of the Obama administration, made improving the recall system and maximizing repairs a top priority. In 2015, he hosted a workshop in Washington with a cross section of stakeholders that examined how to increase recall completion rates.

But today, the process for identifying vehicle owners, informing them about a problem and completing the necessary repairs remains disjointed at best, with few reforms to improve recall efficiency and better protect the public when the next vehicle safety crisis hits.

“There are a wide variety of ways to notify people of recalls, and NHTSA has been notoriously negligent in testing various recall notification mechanisms,” said Jack Gillis, director of public affairs at the Consumer Federation of America.

NHTSA’s public affairs office did not make anyone available to discuss how the agency is addressing shortcomings in the recall process.

Automakers vary in the resources and strategies they dedicate to notify owners and complete repairs, according to federal authorities and safety advocates.

“Several affected vehicle manufacturers are more quickly meeting or even exceeding completion milestones set by NHTSA,” while others lag behind, said John Buretta, an independent monitor overseeing Takata remedy orders on NHTSA’s behalf, in a Nov. 17 progress report.

American Honda, the automaker most exposed to the Takata problem, has set itself apart in trying unique approaches to overcome institutional, political, technological, financial and social barriers to closing outstanding recalls. The company is working to foster better cooperation among regulators, states and the auto industry while exhausting multiple avenues to locate owners, ensure it has the necessary replacement parts in stock and fix faulty airbag inflators that can rupture with deadly force.

Low repair rates

Manufacturers are required to fix defects, usually by repairing or replacing the relevant part for free, and to notify the owner of the available remedy within 60 days of notifying NHTSA.

Traditionally, automakers notify owners by first-class mail. Doing so requires merging their vehicle purchase records with state vehicle registration information.

In 2016, U.S. vehicle recalls reached an all-time high for the third year in a row. Automakers initiated 927 separate recall campaigns affecting a record 53.2 million vehicles, up from 51 million vehicles the year prior. More than 53 million vehicles—about a quarter of the total number on U.S. roads—are operating with unresolved safety recalls, according to NHTSA.

Closing out open recalls on vehicles with known defects is a challenge for automakers and regulators. Only about 70% of vehicles recalled are ever fixed, putting drivers, passengers and other road users at risk. The rate drops to 44% for vehicles 5 to 10 years old and plummets to 15% for vehicles older than 10 years, according to government and industry data.

The completion rate lags Japan (80%), Germany (100%) and the United Kingdom (92%), the Department of Transportation’s inspector general said in a 2011 report. NHTSA’s Office of Defect Investigation considered a 65% recall compliance rate satisfactory until Rosekind set a new goal of 100%.

Many people procrastinate to avoid the hassle of bringing their vehicle in or convince themselves that the defect won’t crop up in their vehicle.

Another barrier is getting accurate contact information from states so automakers can notify people with affected vehicles, especially for second and third owners who don’t appear in sales records. Some states don’t supply the most current registration information to IHS Markit, a third-party database and analytics firm used by automakers for updated vehicle identification numbers. Other states, such as California, provide only title information, which is limited to the last time the car was sold and lacks the most recent address if the owner has moved.

NHTSA ensures that automakers notify owners in a timely manner and confirms that repairs will fix the problem, but it does not directly track, house or distribute recall data. After the GM and Takata recalls, the agency faced criticism for not pushing manufacturers to fully disclose the nature of defects, make initial contact with customers and make repairs.

“There is no federal vehicle registration. Each state has to be approached in a different way because everyone has different funding levels and legislative authorities,” American Honda spokesman Chris Martin said. “So there’s a stack of dominoes that have to fall in place” before state resources can be tapped to facilitate compliance.

Recall closeout rates are higher in Germany and the U.K., the DOT audit suggested, because those countries have laws that require outstanding recalls to be closed before registration is permitted. A vehicle with an open recall is declared inoperable.

DMV resistance

In 2015, Sens. Edward Markey of Massachusetts and Richard Blumenthal of Connecticut, both Democrats, introduced a bill backed by Honda that would require any outstanding safety recall to be completed before a vehicle could be legally registered in a state. Facing lukewarm interest from state motor vehicle departments, the proposal was watered down by the time it was included in the multiyear surface transportation spending blueprint, known as the FAST Act.

The law authorized NHTSA only to establish a two-year pilot program for states to test how to notify owners at the time of registration that an open recall exists.

“We deny registration when people have parking tickets or no insurance,” said Edward Cohen, Honda’s vice president of government and industry relations. “In the ideal world, we should make getting the defect fixed a condition for registration. But you get enormous resistance, so the next best idea is to make sure people know.”

Many state motor vehicle departments don’t want to tie registration to recalls because their antiquated computer systems can’t handle collecting, integrating and printing recall data; they lack legal authority to withhold registration without direction from legislatures; and they fear a consumer backlash, especially if it disproportionately affects poorer drivers with older vehicles or when repair parts are not available, industry and public safety experts say. They also are overwhelmed by other orders from federal and state officials.

“I think a lot of it is a workload issue,” National Safety Council President Deborah Hersman said. “State DMVs are pretty strapped; state budgets are being cut. This is one more thing that we’d be asking them to do.”

A group representing state DMV officials has argued that automakers have the sole obligation to inform consumers about defects. Its complaints include potential liability for failing to provide notification, the costs to link disparate computer systems and a lack of standardized manufacturer data.

“It should not be expected for state governments and DMVs to fix a problem that they did not create. It should be the responsibility of the manufacturer to reach the consumer and have the recall remedied,” Ian Grossman, vice president of the American Association of Motor Vehicle Administrators, told Automotive News.

“We support any states that want to voluntarily engage in outreach and partner with manufacturers,” Grossman said. “What we don’t want is any mandate upon states to have a process requirement or to integrate it into existing transactions” because it could slow service delivery or have financial implications.

But safety advocates say state agencies should be more involved in the recall process.

“Everybody knows what it’s like to deal with a DMV,” Gillis, of the Consumer Federation of America, said. “Generally speaking, DMVs tend not to be innovative in customer relations. However, with today’s technology, they are perfectly positioned to go a long way to resolve the problem of getting notification to the car owner.”

EPA template

The federal government could exert pressure on states to deny registrations on open recalls, but it hasn’t done so. An EPA regulation requires states with stricter emissions-testing programs—23, plus the District of Columbia—to deny registration to vehicles that have an open recall for emissions-related defects, but the agency does not enforce it.

“Enforcing this provision at the state level requires access to lists of VINs for the affected vehicles as well as continuously updated lists of VINs for vehicles repaired under the recall,” an EPA spokeswoman wrote in an email. “EPA currently lacks regulatory authority to collect this information, and the data is currently not readily provided by vehicle manufacturers or other sources.”

Having recall data in a central repository, which automakers are developing, “would force EPA to force the states to track emissions recalls and people to comply with them,” said Michael St. Denis of Revecorp, a Rocklin, Calif., company that provides engineering and technology services for vehicle inspection programs.

St. Denis said states should take a cue from California, which already enforces recalls through DMV registration denial. Six months after a recall has been issued, a manufacturer must turn in a list of noncompliant VINs. The California Air Resources Board pays the DMV $130,000 a year to print notices on registration forms and handle the paperwork. The notices go out with registration renewals saying registration is prohibited until the recall fix is completed, resulting in more than 90% compliance rates, according to the air resources board.

“If you use the government to force compliance, you can get really good compliance,” St. Denis said. An effective EPA program could serve as a model for NHTSA to similarly require states with safety inspection programs to make resolving recalls a requirement, he suggested.

Hersman, a former chairman of the National Transportation Safety Board, said digital connectivity offers an opportunity to close the recall repair gap. Recall reminders could be sent to the vehicle or a smartphone, much like a dashboard light warns when it’s time to get the oil changed. And over-the-air software updates could be pushed to the vehicle, avoiding the need for consumers to visit a dealership for some types of work, though automakers caution that questions about consent, privacy and cybersecurity would need to be addressed for such an option.

Potential solutions voiced by Buretta, the Takata monitor, and other safety advocates to get the attention of owners include using bold text in the mailer notice so it stands out from junk mail, using stronger language and imagery to drive home the dangers associated with the defect and including a reminder in auto insurance renewal notices.

Honda officials say insurance companies have balked at including recall reminders in their renewal mailers.

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