This one's safe.

Photographer: Yoshikazu Tsuno/AFP/Getty Images

Deadly Cars Shouldn't Be a Business Opportunity

Edward Niedermeyer, an auto-industry analyst, is the co-founder of Daily Kanban and the former editor of the blog The Truth About Cars.
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After a 17-year-old Texas woman became the 10th American killed by exploding Takata airbags last month, it was revealed that while the vehicle had been recalled, it had never been taken in for repair. This is tragic but not surprising: Only about a third of the nearly 29 million recalled Takata airbags have actually been replaced.

This frustrating trend goes well beyond airbags. A year and a half after recalling a decade-old ignition-switch defect linked to the deaths of 124 people, GM had still only repaired 70 percent of the devices. Despite offering customers gift cards to Starbucks and Bass Pro Shops as inducements, GM did worse than the industry's 75 percent average recall repair rate after 18 months.

The industry, which faces fines over unrepaired vehicles, has had so little luck convincing consumers to go in for recall repairs made that the Alliance of Automobile Manufacturers sent a plaint to the major insurance companies asking for "assistance in establishing a new way to provide vehicle owners with information about any open safety recalls that may affect their car or truck."

So why hasn’t heavy media coverage of the shotgun-like injuries caused by Takata’s defective devices -- not to mention mandatory recall notices -- motivated customers to bring their cars in to the shop? Part of it is likely the usual consumer inertia. Lots of us put out of our minds the many dangers involved with driving, and don't see the possibility of an exploding airbag as any more worrisome than drunk drivers or other uncontrollable risks.

But there may be another factor at play: Americans really hate car dealerships. And in in this case it seems the desire to avoid going into one may be well-justified. The industry is approaching these recalls not with remorse but as a chance to drum up new business.

GM dealers and executives alike have publicly called the ignition-switch recall an "opportunity" to turn increased dealer traffic into sales. Dealers like the fact that recall repairs are paid for by the automaker; and automakers in turn offer those retailers incentives to buy new models as "courtesy transportation," boosting sales volume. The big hope is that getting people into the showroom can lead to new purchases, or at least to unrelated (and possibly unneeded) repair jobs.

"Aside from the bad publicity, which is never fun, we welcome recalls," one dealership employee said. It gives them a chance to meet car owners and look into their vehicles without cold calls. (The least ethical among them have even been caught selling used cars that were subject to recall but never repaired.)

So perhaps it’s good news, to dealers anyway, that U.S. safety regulators revealed this week that as many as 85 million Takata airbags could still be recalled if the company can't prove they are safe. GM announced on Friday it was recalling more than a million late-model pickups for a seat-belt problem.

Car owners, of course, won't be so pleased. Clearly, we would all prefer even a hard sell out of "Glengarry Glenn Ross" to an exploding steering wheel. But as long as customers feel forced to make that grim choice, recall response rates aren't going to get much better.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Edward Niedermeyer at eniedermeye1@bloomberg.net

To contact the editor responsible for this story:
Tobin Harshaw at tharshaw@bloomberg.net