QNT/561

M. Adams, M. Barker, J. Gene, P. Ritter, J. Sekula, P. Townsend, J. West

Three articles have been chosen with the view point of either the response time of the consumer for recalls or the manufacturer’s response to recalls. In the first article, "it is a study that assesses the impact of recall-specific variables on owner response rates to automotive safety recall campaigns under the National Traffic and Motor Vehicle Safety Act of 1966" (Hoffer, Pruitt, & Reilly, 1994). The second article contends with "trends, patterns, and emerging issues of motor vehicle recalls" (Bates, Holweg, Lewis, & Oliver, 2007). Finally, the last article include information in regards to the "viewpoint of the manufacturer on recalls" (Damary & Hurst, 1982).

It is important management at Colonel Motors understand whether faulty car parts increase risk of injury or death. The resulting recalls can impact Colonel Motors financially and in reputation, which are extremely concerning to Colonel Motors. According to Yong-Kyum & Benitez-Silva,, “We estimate the effect of recalls on the number of accidents and find that a 10 percent increase in the recall rate of a particular model reduces the accidents of that model by between 0.78 percent and 1.6 percent when using the full sample of accidents in our data. We also find that recalls classified as 'hazardous' are more effective in reducing accidents, and the recall effect is especially strong when we restrict attention to accidents that lead to personal injuries and only include vehicles more likely to be at fault for the accident.” (Yong-Kyum & Benitez-Silva, 2011). They suggest that recalls involving accidents can be impacted positively and further found that recalls of these specific models resulted in safer cars in following years.

Management also needs an understanding of how media outlets can impact Colonel Motor’s reputation with regard to recalls involved in accidents. “For instance, the coverage of recalls affecting vehicles produced by Ford, GM and Chrysler in Wall Street Journal has been shown to have negative impact on the stock price of these companies—much more so, in fact, than official notices by the car makers themselves.” (Bates, Holweg, Lewis, Oliver, 2007)

“It is only when the recall issues hit the mass media that Toyota’s corporate reputation shows significant movement. Further, the research suggests that any representative sample of media outlets can be used to gauge opinion, and that automated sentiment scoring is sufficient.” (Fan, D., Geddes, D., & Flory, F., 2013). It is important management note this and pays attention to recent research about the affects media has on competitors and their reputations.

In the article ANALYSIS OF ACCIDENT RATES BY AGE, GENDER, AND TIME OF DAY BASED ON THE 1990 NATIONWIDE PERSONAL TRANSPORTATION SURVEY (Massie, 1990). In this survey the team at Michigan University contacts the insurance institute of highway safety and reached out for data on all accidents in the year 1990. When doing sampling and data collection in order to not skew the data the university had to take in all the data similar to the census which is a survey of all Americans. With all this data the university was able to breakdown each individual aspect of the accident and provide statistical data to support their theory that people ages 16-19 are 3.3 x more likely to be involved in a crash over the mean group of 25 – 65. The data showed that per driven mile women are more likely to be involved in a fatal accident. With this data the statisticians are able to investigate into why women are at higher risk due to actions such as texting or another form of distraction.

In the article general statistics they looked at the statistics of automotive accidents broken down into several sub categories in order to find trends which are occurring. In this article they base their research on the amount of miles which have been driven and begin their data in the year 1975 to the current. In this data they state that women have always been more likely to die in a car crash even though they drive 13 percent fewer miles than males on average. The data which was collected was done so in the form of cluster sampling in which they acquired all the data on accidents but only took a specific number of samples of men and women from each age group in order to find the mean, and probability of which age group is most likely to have a fatal motor vehicle accident. The data is collected through insurance companies and the insurance institute of highway safety which looks at all driving accidents. In order to adhere to privacy laws this group only took the age, gender, geographical location and kept the individuals anonymous.

GM has a recall on their ignition switches based on 1191 injuries and 178 death claims

throughout the United States. Out of those claims Okayed by Attorney Kenneth Feinberg, who was hired by GM to compensate victims, 27 death claims and 25 injuries have been investigated and approved as valid cases for compensation (CBS, 2014). In addition to the claims six additional recalls have been issued totaling sixty recalls bringing the number of vehicle to thirty million cars and trucks (Fox Detroit, 2014). Given the high profile of vehicle recalls, what research into recalls has already been conducted is the question that we must ask? Most existing studies, all US-based, have focused on the influence and nature of regulation and the external and indirect costs associated with consumer, capital market and media reactions to vehicle recalls (Elsevier, 2014).

References

Bae, Benitez-Silva, Hugo, & Yong-Kyum. (2011). Journal of Policy Analysis and Management. Journal of Policy Analysis and Management, ISSN 0276-8739, Volume 30, Issue 4, pp. 821 – 862.

CBS Interactive Inc. Oct. 13, 2014. “GM Ignition Switch Death Toll Rises to 27”. Retrieved From. http://www.cbsnews.com/news/gm-ignition-switch-deaths-rise-to-27/

General Statistics. (2013, March 1). Retrieved October 16, 2014.

Massie, D. (1990, January 1). ANALYSIS OF ACCIDENT RATES BY AGE, GENDER, AND

TIME OF DAY BASED ON THE 1990 NATIONWIDE PERSONAL

TRANSPORTATION SURVEY. Retrieved October 16, 2014

Mayne, E. (2001). Left holding the bag. Ward's Auto World, 37(4), 30-33. Retrieved from