Vehicle Recalls: How Is Your Company Affected?

The automotive market has been in an upheaval over the last few years, and one of the biggest issues has been vehicle recalls. These recalls have significantly impacted manufacturers, supplies, customers, fleet managers, and more, and they aren’t slowing down. 

Let’s look at how vehicle recalls could affect your business and what your options are moving forward.

The Sweeping Impact of Vehicle Recalls

Vehicle recalls can happen to any manufacturer and for any number of reasons. And when cars are recalled, it’s frustrating for drivers, car lots, and company fleets alike. Here are some of the biggest vehicle recalls by manufacturer from the last decade. 

• Chrysler — Roughly 154,000 Jeep Wranglers and Jeep Grand Cherokees models from 2020 – 2024 were recalled in early October, 2024 for risk of fire.
• Mercedes-Benz — Roughly 1 million vehicles made between 2015-2017 had to be recalled due to an issue with the starter. This prevented the engine from turning over and created a fire hazard. 
• Dodge — Around 1.2 million trucks were recalled for the 2017-2018 release years. This vehicle recall had to do with transmission failure caused by an issue with the Brake Transmission Shift Interlock system. This led to overheating and the system catching fire. 
• Volkswagen — The company had to recall about 3 million 2013 models thanks to a gearbox malfunction affecting the stop/go function, which caused the vehicle to lurch forward or backward while driving. 
• General Motors — Roughly 3.6 million vehicles (most of the 2016 lineup) had to be recalled due to a defective sensor that caused the front airbags to open randomly and potentially not deploy in an accident. 
• Volkswagen — Around 140,000 2018-2021 Atlas and 2020 Atlas Crossovers had to be recalled thanks to a faulty front passenger airbag sensor. The sensor would switch off even if there was a passenger in the seat, which was a severe safety risk in case of an accident.  
• BMW — The company had around 90,000 vehicles recalled with manufacture years between 2000 and 2006. The Takata airbags in these cars had a high risk of failure during a collision, and drivers were advised not to drive their vehicles until the issue was fixed. 
• Tesla — More than two million vehicles have been affected by the recall spanning manufacture years between 2012 and 2023. The company decided that it was too easy to misuse the Autopilot active driving assistance (ADA) System.

The range of issues in these vehicle recalls highlights why companies must stay informed on active recalls and recall-related issues. By monitoring recalls and potential issues as they arise, you can prevent bigger issues while maintaining company operations and reputation. 

Are Your Fleet Vehicles Recalled? 

You never want to worry about the cars in your fleet. But, as demonstrated above, recalls happen across brands and at unexpected times. If you catch a glimpse of a headline or hear something on the radio that alarms you, you can always check. Just visit the National Highway Traffic Safety Administration here to see if your vehicles are in active recall. 

How Can Vehicle Recalls Impact Your Company?

Vehicle recalls can affect your company in several ways. This will vary based on your vehicle program. From mileage reimbursement to company-provided vehicle programs, the impacts range from minimal to incredibly challenging. Here are some of the impacts your company could face from vehicle recalls. 

Vehicle Recalls Impacting Reimbursement Programs 

If your drivers use their own vehicles and are compensated through a reimbursement program, vehicle recalls can be problematic. Employees may be able to acquire rental cars from their local dealership in case vehicle recalls. If not, your company might offer rental cars so the repair does not impact business. When offering replacement vehicles during a vehicle recall, consider the following: 

• The financial implications of providing a rental car during vehicle recalls. 
• Coordination and logistics of reporting recalls and communicating with rental companies. 
• Creating policies around recall procedures and driver expense documentation. 
• Effectively communicating with employees during recalls and repairs to minimize disruptions. 

Vehicle Recalls Impacting Company-Provided Vehicle Programs

Vehicle recalls by manufacturer pose a significantly higher threat to businesses with company-provided vehicle programs. If most of your fleet vehicles are the same make and model, business might come to a stand still if those vehicles are recalled. Scrambling to replace a fleet of vehicles will be a costly logistical nightmare. Your business may struggle to meet demand, and customer satisfaction might also take a hit.

It’s important to have a contingency plan if you’re ever faced with mass recalls. A good plan will help limit downtime, prevent service disruption and reduce surprise costs. 

• Financial consequences: When your fleet has cars recalled, the vehicles may need costly repairs. Worse, they may need to be replaced entirely. This could significantly impact your budget, especially if you have a sizable fleet or operate in multiple locations.
  

• Brand reputation: Vehicle recalls can limit the functionality of your fleet, meaning you may not be able to meet customer needs. A vehicle recall could indicate safety concerns and quality issues, leading to a loss of customer trust and loyalty. Customers may hesitate to use your services or vehicles. Changing that perception will be challenging.
  

• Operational disruptions: Your company cannot use recalled vehicles until the issue is fixed. That will limit the productivity of your mobile workforce and potentially the services you can offer. This could be highly problematic if your entire fleet consists of one specific vehicle model, shutting down operations entirely.
  

• Compliance and regulatory issues: Fleet companies are held to strict regulation and safety standards. Vehicle recalls could signal non-compliance in these areas. Additionally, not complying with these requirements could lead to financial or legal repercussions. It’s essential to address vehicle recalls promptly to avoid further issues.
  

• Supplier relations: If your fleet vehicles are used for transportation or other supply services, vehicle recalls could tarnish supplier relationships. Vehicles recalled for faulty parts or components could reflect poorly on the supplier, straining their partnership with you. When this happens, suppliers may reconsider your contracts and look for other options instead of waiting for a resolution. 
  
• Customer satisfaction: When you have cars recalled, it can directly impact customer satisfaction. If a customer is inconvenienced due to a recall, they may view your company negatively. This could result in negative company reviews, reduced customer loyalty, and loss of future business. 

To help limit the potential effects of vehicle recalls on your business, it’s important to have a plan for dealing with recalls quickly and efficiently. 

Rethinking the Investment in Fleet Vehicles

In certain instances, fleet vehicles can benefit companies. They ensure the company provides the type of vehicle that employees need to meet their responsibilities. They allow companies to choose how much to invest in the technology and safety features. Fleet vehicles also provide a level of continuity: people may know a brand by the vehicles their employees drive.

These positives sound great, right? But after the initial investment and continual maintenance, recalls may impact your fleet. Chip shortages disrupted new vehicles hitting car lots which resulted in waiting lists for new vehicles. Strikes in the automotive industry can also impact the fleet vehicle supply chain, delay vehicle deliveries and fleet operations.

As we mentioned above, there are times where fleet vehicles can benefit a company’s needs to be effective. That doesn’t mean every company is a good fit for the program.

What can your company do to prevent recall-related issues?

While companies with a mileage reimbursement program may not be impacted as severely by a recall, companies with fleet programs aren’t so lucky. For that reason, businesses with fleets must prevent recall-related issues when possible. To best mitigate potential risks, companies can: 

• Proactively monitoring and reporting on current recall announcements and industry news. 
• Selecting fleet vehicles with solid track records of reliability and safety. 
• Implementing a comprehensive fleet maintenance and inspection program.
• Effectively communicating with drivers, vehicle manufacturers, and supplies when vehicle recalls happen. 

But, at the end of the day, there are only three paths to dealing with potential fleet vehicle recalls.

Business as Usual 

Taking this approach means changing nothing. Your fleet vehicles don’t have active recalls and you aren’t experiencing recall-related issues. But past and current vehicle performance doesn’t guarantee future performance. Issues may develop at anytime. You might save costs by not changing your fleet for now, but you should save up for any future recalls. 

Diversify Your Fleet 

Instead of having all your vehicles be the same make and model, try purchasing similar vehicles from different manufacturers. This approach could help minimize the impact of vehicles recalled since the whole fleet won’t be affected. Before making purchases, research different vehicles to find the ones with the best reliability and safety records. 

Switch Vehicle Programs 

Vehicle prices and maintenance costs continue to rise, making fleet management an increasingly costly venture. To mitigate the expenses of running and maintaining a fleet, consider alternative vehicle programs. The best option would be to switch to a vehicle reimbursement program like FAVR, with drivers using their own cars. This approach relieves you of the financial burden of vehicle ownership and maintenance, making it a better choice.

Since the beginning of the COVID pandemic, the need for vehicles is still present. Rental vehicles continue to saturate the used vehicle market. When it comes time to sell old vehicles and purchase new ones, you may not see the return of investment in the resale value.

Next Steps for Your Company

Whether you decide to keep business as usual, diversify your fleet or switch to a vehicle reimbursement program, there is much to consider here. The best step you can take moving forward is educating yourself. To make an informed decision regarding vehicle recalls for your company, you should: 

• Consider all of your available options. 
• Research the pros and cons of remaining in a fleet.
• Evaluate the financial impacts of maintaining a fleet compared to alternative options. 
• Assess how the different choices would impact your overall operations. 
• Speak with industry experts to gain further insight. 

If leaving a fleet for an alternative program is right for you, develop a plan for approaching this change. Feel free to reach out to our team to get started! If you’re not quite ready for that, we get it. At Motus, we want you to feel empowered and informed about every aspect of your business. That’s why we’ve created a guide to help you learn more about transitioning out a fleet if that’s what you want.

Read the Guide