Auto recall, how bad at the bottom line?

Today brings news of another multi-million unit recall covering 3.4 million units with Happy_Auto_Repair_Customerpotential airbag inflator issues. In 2011 (the last year I have numbers for) more than 15 million motor vehicle were recalled in the U.S. While massive global recalls top headlines, do they really matter.  Well, like all things, that depends.  First it depends on how they are handled.  And secondly on what they are for.

This airbag issue is a great example of a recall that looks more financially relevant than it 10FS2_figabcreally is.  Toyota has the biggest exposure with 1.7 million units mainly in Japan and North America.  The cost of the recall could be several hundred million US dollars, however, the key word is “could”. Continue reading