Last year three times as many vehicles were recalled in the US than were sold in 2013. This is equivalent to 63,000,000 vehicles which if lined up bumper to bumper, would surround the world 6 times!

This is not expected to be a fluke year; recalls are predicted to increase even further. Reports anticipate that this is due to changes in car production – “parts are being shared between cars and manufacturers in volumes not previously seen before” which “could pose huge problems if a faulty part enters the chain” says Ian Fletcher, senior analyst at IHS Automotive.

Another contributing factor is the rapidly increasing complexity of vehicle design – a typical car contains about 30,000 parts and 10 million lines of software code. Manufacturers are consistently under pressure to make them safer, more environmentally friendly as well as satisfy consumers’ rising expectations of styling, power, handling reliability and gadgets. Meeting all of these requirements demands great complexity, making recalls “an industry challenge that will only intensify as vehicles integrate ever-more-elaborate hardware, software, safety equipment and creature comforts” as reported in the Harvard Business Review.

The threat of increasing recalls goes hand in hand with car manufacturer’s heightened caution of parts suppliers. This new level of threat is reflected in the growing trend for car manufacturers to mandate that parts manufacturers purchase recall insurance. Car manufacturers are looking at their suppliers with more scrutiny and considering ways in which the supplier can take more responsibility and ultimately potential cost in the event of a recall. This growing pressure on auto-parts suppliers to raise quality standards (as explored in the Insurance Journal) is heightened further when also contending with a more scrupulous National Highway Traffic Safety Administration. The recent proposal to nearly triple the NHTSA budget would more than double the office’s headcount, almost certainly leading to more safety defect investigations (Automotive News).

There are comprehensive recall insurance solutions available to protect automotive parts manufacturers anywhere in the world. The product protects against the cost of a recall as well as the installation costs and also provides specialist guidance throughout the recall process.

To find out more about our solutions for automotive parts manufacturers, please contact Rob Marshall.

Click here to download the brochure.