The National Highway Traffic Safety Administration (NHTSA) reported that 63.95 million vehicles were recalled last year, which is a record. That did not affect what was close to another near record — car sales in the United States. People must not care about their safety, or they believe that recalls are minor events.
The reason for the record was the General Motors Co. (NYSE: GM) recall of over 26 million cars and light trucks. At least 50 people were killed in GM cars that had deadly flaws. The count has actually reached 52, but many legal experts believe the number could rise. The media and experts say GM has been efficient in paying off people who have filed claims because of the fatalities. Early in the process, some guessed the cost of the recalls could jump into the billions of dollars and wreck one or two GM quarters financially. The charges have not even come close to that.
Car and light truck sales in the United States reached 16.44 million in 2014, a level last exceeded eight years before. GM’s 2014 market share was 17.8%, about equal to in 2013. In other words, the public did not shy away from buying GM cars at all.
One of the perverse ways that some people look at 2014 car sales is that people who returned to dealers to have their recalled vehicles fixed wandered into showrooms, where they found appealing new cars. That triggered some level of new sales and contributed to the 16.44 million.
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The most likely explanation for the huge national sales level is that people think that most recalls are minor nuisances. Why fret when the number of people who die in defective cars is dwarfed by those who die in drunk driving accidents. The math is in the favor of the person who has a car that is recalled. “What, me worry?” as Alfred E. Neuman used to say.
It is a strange world in which people overlook an industry plagued by recalls to buy more cars, perhaps hoping the new ones will be defect-free.
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