Recall clustering is a phenomenon that occurs in the automotive industry when automakers strategically delay announcing recalls to minimize negative attention and stock market penalties; this practice involves waiting for other companies to announce recalls before initiating their own.

Researchers have found that 73% of auto recalls are announced in clusters, indicating a pattern in how automakers handle the discourse of vehicle defects.

 

What Does the Auto Recall Study Say?

A study, “Hiding in the Herd: The Product Recall Clustering Phenomenon,” analyzed 3,117 auto recalls over 48 years and revealed that recalls are often announced in clusters. On average, 7.6 recalls are issued within 34 days. The study focused on major automakers such as General Motors, Chrysler, Ford, Honda, Toyota, and Nissan and found that these manufacturers initiated 9% of recalls.

The study highlighted the financial impact of being the first automaker to issue a recall in a cluster. The company that initiates the leading recall experiences a 67% greater drop in stock prices than subsequent recalls. Automakers strategically delay their recalls to minimize the negative impact on their stock market performance.

 

The Fuel Tank Example: Illustrating Recall Clustering

In August 2017, Ford announced a recall due to leaky fuel tank valves. Following suit, Honda and Chrysler also issued recalls related to fuel tanks and oil hoses, respectively. By being the first to announce the recall, Ford faced a larger stock market penalty than the other automakers involved.

 

Does a Recall Mean I Have a Lemon Car?

No, an auto recall doesn’t necessarily mean you’ve purchased a lemon. Recalls can be issued for various defects that could arise in a vehicle, such as brake issues or faulty airbags. In many cases, the problems identified in recalls can be repaired on the first attempt, and the manufacturer covers the cost of warranty repairs.

However, if the issue that led to the recall is the same as the problem you experienced with your vehicle, and your car meets the lemon law criteria, you may have a stronger claim. Lemon laws vary by state, but generally, a vehicle must have a defect that substantially impairs its use, value, or safety and can’t be repaired after several reasonable attempts. 

It’s best to talk to a lemon law lawyer to know your rights and what you can do legally. 

 

How Do I Know If My Car Is Recalled?

If your vehicle is part of a recall, the manufacturer should have sent you a notice in the mail. However, you can also check if your car’s make and model has been subject to a recent recall by entering the VIN (Vehicle Identification Number) on the National Highway Traffic Safety Administration (NHTSA) website.

 

Hiding Recalls May Hide Lemons Too — Contact Our California Lemon Law Firm Today!

Norman Taylor & Associates specializes in California lemon law cases and has a team of experienced attorneys ready to assist you. Call 818-244-3905 or contact our firm today for a FREE consultation, and let us help you with your claim!

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