Term Paper on "Automotive Industry and the Consumer"

Term Paper 30 pages (9475 words) Sources: 15 Style: MLA

[EXCERPT] . . . .

Vehicle Recall on Consumer Perception

Product recall

The effect of vehicle effect on consumer behavior

Vehicle recall and marketing

Effects of recall motor Vehicle Industry

In this research, we evaluate the effects of motor vehicle recalls on consumers' perception of brand and safety. The perceptions of the consumer are evaluated as well as the brands that are susceptible to recalls. Our focus however, is on Ford Motors. The effects of vehicle recalls on consumer safety and brand loyalty are evaluated also investigated. A recommendation of the best vehicle recall framework is presented.

Every year, millions of vehicles costing billions of dollars get recalled to their manufacturers due to safety related defects. This presents a significant amount of concern to the companies that are concerned, their stakeholders as well as customers. In this paper, we explore the various perceptions that customers form of companies that recall vehicles. The effect of vehicle recall on the customer's perception is therefore investigated.

Product recall

Product recall can be described as a request or process of returning either a batch or entire product to the producer due to discovery of defections and safety issues. Recall happens in cases where a product has been detected to have significant substandard quality and is found out to be violating on consumer product safety regulation standard hence dangerous for consumption (Pruitt and Peterson 122). The process of recall begins with a detection of defect by either, the federal agency, producers, distributer, a retailer or a customer. If the defect has been detected by the manufacturer, then they can recall the goods immediately, but if detected by others as stated, it then implies that communication must be done to the company hence needs time to act. It is clear that recall can either be initiated by the affected company or under the directions of a federal agency.Recalls always presents major challenges to manufacturing companies including; serious damage to the brand integrity, reputation of the manufacturing company and hence reduced sales volume (Cheah 428). On the other hand, it can portray a positive image of the company depending why the recall was undertaken. Recalls can be categorized into three depending on the percentage of the product involved in the recall process thus; Major recall where more than 20% of the products are recalled; Medium recall occurs when the manufacturing company recalls products ranging from 10% to 20%; and finally minor recall happens when the manufacturing company recalls products less than 10% (Hartman 368).

Before undertaking the recall process, the company is supposed to set budget aside for the process, this is because the manufacturing company shall be required to meet all the costs including; notification to the customers on the products to be recalled, cost of correcting the defects; transport cost from the customer to the manufacturing company and back. It is also clear that the manufacturing company shall meet indirect cost like damage to the brand quality, bad reputation to the company both leading to reduced profits (Pruitt and Peterson 122).Every year, millions of motor vehicles valued at millions of dollars get recalled by their manufactures due to safety-related defects. Consumers are heavily affected by these recalls since they feel a sense of danger as their lives. This subsequently affects their purchase decision and loyalty. The National Highway Traffic Safety Administration (NHTSA 1) reported about 37,261 road carnage fatalities. It has been observed that most road accidents are caused by the misbehavior and mistakes of the drivers (Bae & Beni'tez-Silva 2). It is however, worthwhile to note that vehicular defects play an important role in the cause of road carnage. Bae & Beni'tez-Silva (1) pointed out that more than 16 million cars were recalled in 2009 alone. Bae & Beni'tez-Silva (2) define safety defect to a problem that a certain vehicle has or that equipment in the vehicle has and that poses a risk to the safety of the vehicle. In order to get rid of the defective vehicles from the road, the NHTSA demands that all vehicle manufacturers recall the defective vehicles and then fix the defects at no cost to the motor vehicle owners. The last couple of decades have seen an exponential increase in the number of motor vehicle recalls. The National Traffic and Motor Vehicle Safety Act mandate the NHTSA to require that motor vehicle manufacturers recall all vehicles that have defects that are safety-related and that could cause the loss of vehicular control. Such defects could affect the steering and braking system and lead to the stalling of the motor vehicle. There are laid down motor vehicle safety standards that must be adhered to by the manufacturers. According to Bae & Beni'tez-Silva (2), the recalls can either be voluntary or involuntary. The voluntary recalls should be communicated by the manufacturers according to the government directives. Failure to comply with the government recall decisions may lead to a legal resolution of the ensuing dispute. The negotiation that occurs between the government and the auto manufacturers is discussed by Tobin (534). The NHTSA also provides the motor vehicle owners with information on how to launch complaints.

The recall process

Since the late 1960s auto mobile manufacturers have been required to give notice to the owners of their vehicles which they feel relates to their safety. Recently motor vehicle manufacturers have been faced with a new source of embarrassment and concern which is known as the auto mobile recall. After products have entered the market place and some sold then defects are apparent. The same are usually safety related. In cases where defects are detected then the manufacturers of the said products may issue a recall of those products that already in market. Recall is a procedure that is taken by a manufacturer to remove a certain product from the market. The process of recall affords manufacturers the opportunity to repair or replace the products that are defective. These procedures are often costly to the manufacturers but cannot be compared to the cost of several law suits that may be file against them or the loss goodwill among the consumers.

The process of issuing recalls varies with the kind of product in relation to the effect that may be caused to the consumer. Manufacturers are required to emend and/or repair at no charge only the defects that do exist at the time and period of the recall. The recall laws do not apply to owners of motor vehicle who had experienced certain problems before a manufacturer announces recall even if they had repairs made at their own expenses. Moreover, the manufacturers will not be liable for any damages caused by the defects. For example, if motor vehicle owners have a defective tire and it blows out which leading to damage to the brake, then the manufacturers are not required to pay for the brake damage.

This therefore means that the consumers that are affected by the recall are wise to have the recall work done as soon as the recall notice is issued. There are however a few exception to the rule of recall. In instances where consumers are able to provide sound and reasonable documentation of damage suffered as a result of a defect, manufacturers of the product have agreed to pay and cover the cost of the damage incurred voluntarily. By doing this the manufacture will be able to repair damage image.

There is however restriction on the consumers' rights to take advantage of the recall process. For example, issues regarding the age of the motor vehicle. There is always a limitation regarding the herein referred issue. In order for one to be eligible for repairs, replacement or refund the motor vehicle must be less than eight-year-old on the date of the defect. It is usually based on the date sold to the first purchaser. In the event that there is a recall of motor vehicle a customer is liable to replacement, repair or refund of the defective part without any charge and that the same should occur within a reasonable time. There are procedures that ought to be followed by the manufacture so as to remedy the consumer after a defect is discovered and then a recall ordered. The manufacturer is therefore given time to develop procedures so as to remedy the defect, to instruct and inform the distributors or dealers of the said product on how to repair the product, to provide the parts that are necessary for replacement or repair and also to communicate to the consumers about how the recall process will be conducted.

Since the recall process involves time consuming steps the manufacturers are therefore given a reasonable time to correct and remedy the defect. The time is usually 60 days which is summed from the time that the parts are available. The manufacturer is therefore required to specify that information in its recall letter.The consumers are highly affected by the recall process of motor vehicle as the process is time consuming and the consumer may be forced to… READ MORE

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