When Recalls Matter: Factors Affecting Owner Response to Automotive Recalls

Hoffer, George E.; Pruitt, Stephen W.; Reilly, Robert J.

doi:10.1111/j.1745-6606.1994.tb00816.x

Cited by 29 publications

(20 citation statements)

References 7 publications

(6 reference statements)

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“…A previous study of owner repair rates by Ho¡er, Pruitt, and Reilly [1994] ¢nds a similar result and o¡ers the explanation: domestic cars are of lower quality so owners bundle other needed repairs with the recall repair, which lowers the transaction cost of correcting the defect. Guided by Claim 4, we also tell a story based on transaction costs, yet for a di¡erent reason.…”

Section: V(iii) Resultssupporting

confidence: 70%

“…Second, one and two-year-old cars are very likely to be under service warranty. Hence, borrowing from the Ho¡er, Pruitt, and Reilly [1994] story, owners of new cars are likely to bundle recall repairs with service warrantee work and other regularly scheduled maintenance trips to the dealer. Finally, inaugural model year vehicles have signi¢cantly higher repair rates.…”

Section: V(iii) Resultsmentioning

confidence: 99%

“…On the subject of owner-response rates to recall campaigns, Ho¡er, Pruitt, and Reilly [1994], using 1984^86 NHTSA data, ¢nd that recalls involving domestic, recent model vehicles with severe safety defects generate the largest rates of repair. Our paper employs both NHTSA and WSJ recall data spanning nineteen years to re-examine this question.…”

mentioning

confidence: 99%

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Who Initiates Recalls and Who Cares? Evidence from the Automobile Industry

Rupp

Taylor

2002

The J Industrial Economics

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In this paper, we investigate two questions. First, we explore which entity (the NHTSA or the manufacturer) is more likely to initiate a given auto safety recall campaign. Second, we analyze the determinants of owner response rates to safety recalls. Our data spans nineteen years (1980–1998) for the six largest auto manufacturers. We find evidence that the government initiates larger, less hazardous recalls involving older models and financially weak firms. Inexpensive recalls are more likely to be manufacturer initiated. The largest owner repair responses are associated with newsworthy hazardous defects of new domestic vehicles in their inaugural model year.

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Section: V(iii) Resultssupporting

confidence: 70%

Section: V(iii) Resultsmentioning

confidence: 99%

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Who Initiates Recalls and Who Cares? Evidence from the Automobile Industry

Rupp

Taylor

2002

The J Industrial Economics

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“…Hoffer, Pruitt, and Reilly (1994) show that recalls of domestic new model vehicles with severe safety defects generate the largest corrective rates. They define the rates as the ratio of the number of the units repaired to the number of the units issued for the vehicle model.…”

Section: Background On the Recall System And The Related Literaturementioning

confidence: 99%

Do vehicle recalls reduce the number of accidents? The case of the U.S. car market

Bae

Benı́tez-Silva

2011

J Policy Anal Manage

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The number of automobile recalls in the U.S. has sharply increased in the last decade and a half, and the number of units involved in these recalls are often counted in the millions. In 2004 alone, over 30 million vehicles were recalled in the United States. However, there is no quantitative evidence of the effect of recalls on safety. Without that evidence, the government and insurance companies have been reluctant to request and use more detailed recall information to increase correction rates. In this paper we empirically quantify the effect of vehicle recalls on safety using repeated cross-sections on accidents of individual drivers and aggregate vehicle recall data, to construct synthetic panel data on individual drivers of a particular vehicle model. We estimate the effect of recalls on the number of accidents, and find that recalls of a particular model reduce accidents of that model by 20%. Recalls classified as "hazardous," and those initiated by foreign manufacturers are more effective in reducing accidents. We also find that vehicle models with recalls with higher correction rates have on average less accidents in the years following a recall, which indicates the importance of the role of drivers' behavior regarding recalls, on safety. The latter suggests that society as a whole, individual drivers, and insurance companies, could benefit from an initiative to take into account recall correction behavior when pricing auto insurance.

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“…While a number of recall studies have focused on expensive products associated with high involvement (e.g., automobiles) (De Matos & Rossi, 2007;Hoffer, Pruitt, & Reilly, 1994), children's toys represent an interesting category since these products are not big-ticket items but still involve safety concerns (as Mattel, the world's largest toy-maker, has learned from its recalls of faulty toys (Ainsworth-Vincze, 2010). The global toy industry, generating over $78 billion in 2008(ICTI, 2008) takes children as a major market.…”

mentioning

confidence: 99%

To Recall or Not to Recall a Flawed Product: Corporate Responses and Consumer Perceptions of Toy Recalls

Murphy¹,

Popa²

2012

JPR

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Examining parents' reactions to incidents involving toy defects, the authors find that corporate strategies of handling product problems influence consumer attitudes and purchase intentions, and beneficial effects of recalling a product can arise for firms, particularly when the product problem is minor and the company response is strong.This research emphasizes that product recalls can be viewed not only from the disaster-mitigation perspective of prior literature, but also as opportunities for companies to realize market benefits by engaging in responsible recall behavior, forging better relationships with customers. Additionally, the authors find that individuals' search for information following recall news is dependent on the product defect encountered.

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When Recalls Matter: Factors Affecting Owner Response to Automotive Recalls

Cited by 29 publications

References 7 publications

Who Initiates Recalls and Who Cares? Evidence from the Automobile Industry

Who Initiates Recalls and Who Cares? Evidence from the Automobile Industry

Do vehicle recalls reduce the number of accidents? The case of the U.S. car market

To Recall or Not to Recall a Flawed Product: Corporate Responses and Consumer Perceptions of Toy Recalls

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