Vehicle quality concerns persist as Ford, Tesla grapple with recalls

In Q2, the number of U.S. vehicle recalls reached 115, up from 105 in Q1, but the number of vehicles affected was drastically lower. 4,621,994 vehicles were recalled in the second quarter, over 5 million fewer than in Q1.

Why it matters: While the number of recalls has been on the rise over the past few years, the decrease in affected vehicles suggests automakers could finally be catching problems earlier in the production process.

Driving the news: Leading the pack this time is Chrysler with 14 recalls total. Ford closed in at no. 2 with 12. These brands were the only ones to break double-digits. What’s more, Ford took first for the most vehicles affected – 1,380,879 units.

Flashback: Earlier this year, Ford CEO Jim Farley said one of his “big” regrets is the sheer amount of recalls. Now, the company is delaying delivering many newly redesigned cars for six additional weeks of quality checks.

What’s more: Cars are more connected than ever by software and internet capabilities, and an increasing number of recalls are cost-effective, over-the-air (OTA) updates.

Since we don’t know the precise number of OTA updates relative to overall recalls, it’s challenging to determine the actual costs. Yet,  ABI Research estimates that roughly $1.5 billion by 2028 – a good chunk of change, but at the end of the day, recalls are still very expensive. Ford alone, in 2023 paid $4.78 billion in warranty claims.

Between the lines: Going by what Stanford Law School says, all over-the-air updates are recalls but not all recalls are over-the-air updates (Tesla included). Although most of the EV maker’s recalls are in fact OTA updates. Yet, Stanford Law Associate Professor Bryant Walker Smith says the distinction should rather be between “physical recalls” and “virtual recalls.” 

Speaking of Tesla, on June 25, the EV maker announced its fourth recall of the Cybertruck and the big ones are not over-the-air updates. 

• Tesla recalled 3,878 of its 2024 Cybertrucks due to the accelerator pedal pad possibly dislodging and becoming trapped by the interior trim, according to a filing with the National Highway Traffic Safety Administration (NHTSA). 

• Now, Tesla has to fix problems with trim pieces that can come loose and front windshield wipers that can fail.

Sidebar: The recalls each affect more than 11,000 Cybertrucks, meaning we know Tesla has produced at least 11,000 units. While we don’t know exactly how many were sold (Tesla doesn’t break down its sales by model), demand appears to be high even compared to Ford, which is seeing large quarter-over-quarter gains for the F-150 Lightning. Sales totaled 15,645 trucks through Q2.

What’s next? Dealership service departments might possibly see a dip in the amount of warranty work coming down the pipeline. That could be a good or bad thing depending on who you talk to. On the one hand, warranty work makes up a lot of total labor sales. But the other side of the coin, warranty work takes time, energy, and resources away from the (often more lucrative) customer pay. 

More importantly: "In a recent Bloomberg report the number one reason consumers cited for not taking their vehicle in for potentially hazardous and even deadly recalls is a lack of convenience," said Hunter Swift, Vice President of Marketing at BizzyCar. "This year alone, 12,837,245 vehicles have been affected by recalls that pose a crash risk or increase the risk of injury.

Bottom line: Customer safety has to be a top priority for both automakers and dealers. By proactively communicating and coordinating repairs with drivers, dealers can optimize the process and maybe win over some lifelong customers.

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