The challenges of increasing vehicle recall completions
Automakers are recalling vehicles more than ever before. Over the last decade, at least 28 million vehicles were recalled every year for safety defects. In fact, more vehicles were recalled each year than there were new vehicles sold, and the rate is growing. The average annual vehicle recall repair count rose to 36 million from 2013 to 2023 — a 110% increase over from the previous decade.
Making things worse, automakers have a recall completion problem. With the goal of keeping drivers and passengers safe, automakers aim for a 100% recall repair rate. Despite automakers’ efforts, many drivers are not repairing their recalled vehicles, which can leave automakers open to regulator fines of over $100 million.
On average, only 64% of drivers complete their vehicle recalls each year. In 2022, only 58% of drivers repaired their recalled vehicles — a slight increase from 52% in 2021, which was the lowest recall repair rate since 2010. With low recall repair rates year over year, it’s no surprise that up to 25% of all vehicles on US roads today are estimated to have one or more open recalls.
With vehicle safety at risk, why aren’t drivers completing recalls? There are many reasons why. Let’s review.
A significant factor is that it’s hard for automakers to reach current owners of pre-owned vehicles, which limits recall awareness. There are a number of reasons why. Automakers rely on up-to-date vehicle registration information to notify owners about recalls. However, the systems they use to manage and contact current vehicle owners may have missing or outdated information, such as updated mailing addresses. For example, in 2018, an Arizona man died in a crash after a recalled airbag in his pre-owned 2002 Honda Civic malfunctioned. The man had purchased the vehicle three months before the crash. Honda says it mailed the car owner 12 recall notices and attempted 20 phone calls over four years. However, Honda didn’t know the vehicle’s ownership had changed, and the new driver was never notified.
Car dealers aren’t required by federal law to repair or inform buyers about recalls on used vehicles, so pre-owned vehicle owners may never learn about a recall at all. For these reasons, older vehicles are less likely to have recalls repaired. Recall completion rates fall to 44% for vehicles that are 5-10 years old and 15% for vehicles older than 10 years. Meanwhile, the completion rate for newer vehicles averages 83%.
Another reason drivers don’t complete recalls is because they don’t always take them seriously. A survey conducted in 2018 found that 70% of drivers choose to complete a recall based on how risky they perceive the problem to be. Further, the survey found that 26% of drivers do not believe recall notices pose a serious risk to them or their vehicle. This is especially true for owners of older pre-owned vehicles, who are 32% less likely to get their vehicles repaired than owners of newer vehicles.
Drivers also think that getting their recalled vehicles repaired is inconvenient. Thirty-six percent of customers don’t bring in their vehicles for recall repairs because they fear it will take too long. To maximize the number of recall repairs completed, automakers need to make it easy for customers to schedule recall repairs and provide a frictionless customer experience.
Automakers can incur costs if customers don’t complete vehicle recalls. The National Highway Traffic Safety Administration (NHTSA) requires automakers to file quarterly progress reports with the number of vehicles repaired and the number of owners reached. Unsatisfactory outreach and completion rates can result in public fines and consent orders. For example, in 2015, NHTSA fined one automaker $105 million for what it called slow handling of recalls and notifications to vehicle owners and dealers.
Not only is improving recall repair rates critical to satisfy regulators, but it’s also an opportunity for automakers to generate revenue with additional repairs. Sixty-four percent of drivers delay vehicle maintenance. However, over 50% of drivers say they would complete their vehicle recalls if it were bundled with vehicle maintenance. Automakers can generate up to $500 for repairs of vehicles with delayed maintenance. By getting vehicles with delayed maintenance into certified repair shops for recall completions, an automaker with 7 million recalled vehicles and a 66% recall repair rate could generate an additional $100 million in repair revenue.
So, how can automakers increase recall completion rates?
Research shows that automakers can optimize outreach and the repair recall experience by increasing digital engagement with customers. For decades, automakers have notified customers about recalls by first-class mail. Today, automakers can use digital touchpoints like their MyBrand app to raise awareness of recalls, personalize customer communications, and offer a more seamless customer experience.
Automakers have primarily used their MyBrand apps for connected vehicle services. Now, they are looking for new in-app features to provide value to all customers, including owners of unconnected vehicles. Older vehicles have the biggest impact on recall completion rates, so driving digital adoption and engagement with unconnected customers in MyBrand apps is key.
Customers want to use digital channels like mobile apps to learn about and manage vehicle recalls. Sixty-four percent of drivers say they would use an app to monitor and manage recalls. However, a multi-channel approach trumps using a single-channel approach for outreach.
One driver who was part of a vehicle recall told NHTSA, “I’d prefer multiple ways to communicate (phone call, text message, email, and snail mail). Sometimes, the postcards sent in the mail just get tossed before I can see them. Nowadays, everyone is looking at their phone at least twice daily, so they would be more likely to get the information in this fashion.”
NHTSA agrees with taking a multi-channel approach. NHTSA’s “Effective Recall Communications” report illustrates that direct communication from automakers to consumers and digital communications are key for accelerating recall repairs.
Automakers can tailor their recall messaging using their MyBrand apps. Personalizing customer communications can make a big impact on if a customer decides to repair their recalled vehicle. In fact, a study from Stout found that completion rates improved by 25% when owner notification letters contained a personalized salutation like, “Dear Mr. Smith,” instead of a generic greeting.
MyBrand apps can also help automakers create a frictionless experience for customers completing their recall repairs. Customers can schedule recall appointments and confirm loan vehicle details directly within the app.
Not only do digital recall repair experiences help increase completion rates, but they also increase customer engagement. Digital recall repair creates an opportunity to drive app adoption and engagement for customers without connected vehicles. Through increased customer engagement, automakers can unlock a number of downstream revenue opportunities. According to CMT research, customers who use their automaker’s app are 40% more loyal to their automaker. They are also 62% more likely to service their vehicle at a certified service center.
Media Contact: Lisa-Marie Pascuccio
lpascuccio@cmtelematics.com