Car recalls. Bad process or great business?

Car recalls. Bad process or great business?

[READ TIME: 1 min]

The numbers around recalls are staggering.There were a record 74.2 million recalls in 2014 according to the National Highway Traffic Safety Administration. The most recent in the US is 433,000 2015 Focus, C-MAX and Escape cars are being recalled to dealerships for a software update. But the largest recall to date is the 36 millions cars being recalled because of potentially dangerous airbags made by Japanese manufacturer Takata.

This may seem to be a failure of quality processes in the design and manufacture that need to be fixed. However, the car companies discovered by accident some time ago that recalls actually drove up new car sales. So actually non-life threatening recalls were actually good for business.

The thinking goes like this:
– Any PR for the company is good PR
– The car company gets to contact its customers and appears proactive
– The recall drives customers into the dealerships
– When the customer visits the dealer there is a good chance the dealer can up-sell them into a new car.

Who would have thought? Just another reason for sales and marketing to diss the value of BPM!!