Market Overview

Truck Recalls Exceed Sales, Year In And Year Out

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Truck Recalls Exceed Sales, Year In And Year Out

Nothing is certain except death and taxes. And, apparently, vehicle recalls. At least once a month, the National Highway Traffic Safety Administration (NHTSA) issues a recall notice, each one representing thousands of vehicles.

In the past several months alone, more than 35,000  trucks manufactured by Paccar, Daimler, Autocar and Navistar were recalled for defects involving seatbelts and clutch issues, according to news reports and NHTSA documents.

That's  a lot of trucks, almost double the number of Class 8 trucks sold in January 2019.

But context is everything. The 35,000 vehicles represent a fraction of the total number of vehicles recalled every year. The latest Navistar recall, for example, followed an earlier recall (in October 2018) of more than 28,000 International trucks  due to fuel line and braking issues.

In September, Daimler Trucks North America (DTNA) recalled 4,500 trucks for that same problem. Earlier in the summer of 2018, DTNA recalled  55,000 trucks to address separate issues with the ignition control unit and steering assembly.

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The numbers add up. Almost every year, the number of commercial trucks recalled exceeds the number of new trucks sold. The same is true for personal vehicles.

In 2017, 42 million vehicles (commercial and personal) were recalled, according to a NHTSA annual report. By comparison, around 17.6 million new vehicles were sold during 2017. (The report does not break down the recalls by vehicle category.)

A review of NHTSA data over the past few years shows some big fluctuations in the annual number of recalls - 79 million vehicles were recalled in 2016 - but the overall trend is consistent.

"There have always been millions of vehicles in recall," said Jonathan Banks, vice president of vehicle valuations and analytics at J.D. Power.

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A few years ago, Banks co-authored a report examining the impact of recalls on the car market. Many of the takeaways are relevant for the commercial truck sector.

During the first 25 years of NHTSA's history (1966-1990), the number of recalls remained relatively consistent, averaging 95 per year.

Beginning in the mid-1990s, however, recall activity surged. From 1994 to 2013, the number of recalls climbed to an average of 177 per year, up 86 percent from the prior period average.

The uptick shouldn't  necessarily be viewed as a negative, Banks said. Manufacturers, he said "are catching and figuring out the faulty aspects of vehicles that they weren't able to identify historically."

The internet is also behind the increase in recall numbers, according to the report. Consumers and dealers can provide information about defects to vehicle manufacturers and NHTSA more easily. This in turn increases the efficiency by which safety defects or noncompliance issues are addressed.

NHTSA itself makes use of new communications technologies to ferret out vehicle defects, a spokesperson said. The agency "scans social media and various car-related websites for indicators of vehicle safety problems and is continually working to mine data and identify potential issues early."

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NHTSA receives more 40,000 consumer complaints each year, the spokesperson said, and opens safety defect investigations or conducts additional analyses "when the data warrant doing so."

Some claim that Environmental Protection Agency rules are also leading to an increase in recalls. Last summer, Cummins Inc. recalled around 500,000 model year 2010-2015 medium- and heavy-duty trucks. The recall was issued to replace a faulty emissions control systems component that causes excess emissions of nitrogen oxides (NOx).  

The Cummins recall is the largest voluntary emissions recall to date.

Cummins did not respond to a request for comment. DTNA and Navistar did not return calls from FreightWaves.

The recent truck recalls are small compared to the catastrophic automotive recalls, such as the millions of cars recalled due to the Takata airbag malfunction, said Steve Tam, vice president of ACT Research, a publisher of commercial vehicle data.

That said, every truck recall is a concern, and not only because of the life safety threat. The defects also hit drivers and companies in the pocketbook, said Tam.

"As with any recall, you're going to have downtime, and that is the trucker's number one enemy," he said.

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