Day: March 3, 2021

Automakers Delay Recalls to Minimize Negative Attention: Study

  • Automakers tend to delay announcing recalls until they can “hide in the herd” of other recalls, lessening the attention paid to their recall and the negative impact on their stock price, a recent study suggests.
  • The study found that 73 percent of recalls are announced in clusters, suggesting that there is a pattern to recall announcements, rather than recalls being randomly called.
  • The study authors recommended that the National Highway Traffic Safety Administration (NHTSA) require automakers to promptly disclose the date they first became aware of a problem.

    Rather than announce recalls as soon as they surface, automakers wait until they can blend into a crowd of other recalls, an academic study suggests. This “clustering” of recalls reduces the attention paid to a given recall, and that lessens the negative impact on the stock price, because the automaker that initiates a cluster of recalls is the one that gets the

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