Automobile safety is a top priority of both manufacturers and consumers, and recalls are to be expected. But this year stands because of the sheer volume of recalls issued.
For its part, General Motors (NYSE:GM) issued a recall of newer-model cars in November because of concerns that the rear-seat head restraints may not lock into place properly and could compromise safety in a collision. This followed an earlier recall related to a fuel-leak risk, and a nearly half-million vehicle recall related to a problem with the transmission in some vehicles that could cause them to roll after being shifted to park.
While the industry isn’t facing an epidemic, the NHTSA definitely looks set to crack down on manufacturers. Part of the settlement with Toyota will require the company and its subsidiaries to make internal changes to their quality assurance programs, and to conduct a review of safety-related issues in the United States.
The last thing a manufacturer wants is the government messing up a carefully calculated manufacturing process, adding an inefficiency to an already heavily-burdened industry.
Investing Insights: Is Caterpillar’s Stock a Safe Bet in Today’s Economy?