Ford Recall Is a Strength, Not a Weakness

(Originally published here.)

Everyone makes mistakes, so it isn’t necessarily a poor reflection on Ford Motor Co. that it has just recalled 161,334 vehicles because they are vulnerable to spontaneous engine fires. (Tesla Motors Inc. isn’t the only one.)

What might be a concern to consumers is the pattern: This is the seventh recall of the automaker’s 2013 Escape crossover model, which went on sale last year. Five of the problems had to do with fires and one of the two recalls announced this week was motivated by concerns that mechanics had botched repairs required by an earlier recall.

Although this might raise questions about quality control at Ford’s plant in Louisville, Kentucky, which made all of the defective vehicles, the recalls illustrate an important point: Although car accidents still cause a shocking number of deaths in the U.S., regulation has dramatically improved automotive safety.

The market reaction to Ford’s recalls suggests that the company isn’t in trouble. Its shares are close to their highest level in more than 10 years and in dollar terms have outperformed shares of both Volkswagen AG and Toyota Motor Corp. — the world’s two biggestcarmakers — over the past 12 months. Perhaps this is because most of these recalls weren’t prompted by serious injuries or deaths. Instead, they were preemptive measures. This focus on safety explains why preventable mechanical failures don’t cause many deaths nowadays. Rather, the big danger is driver error. That bodes well for automotive safety as humans are replacedby computers behind the wheel.

According to the National Highway Traffic Safety Administration, during the past 50 years the number of people killed by cars has fallen by about 80 percent relative to the number of miles driven. Some of this progress can be attributed to technology such as seatbelts, airbags and better brakes, but a lot is also due to stricter rules about drunk driving and heightened enforcement of penalties on car manufacturers that sell defective products. These improvements have saved the lives of tens of thousands of people each year. Even so, the NHTSA reports that more than 33,000 were killed by cars in 2012 — about triple the number of firearms homicides.

Many more people in the U.S. are killed by cars than in most other developed countries, according to the World Health Organization, mainly because Americans drive so much more. (Auto accidents are also part of the reason U.S. life expectancy is low relative to national income.) Intolerance of manufacturing defects and stricter laws have already made a big difference. The next step is to get fallible human drivers off the road.

(Matthew C. Klein is a writer for Bloomberg View. Follow him on Twitter.)


About Matthew C. Klein

I write about the economy and financial markets for Bloomberg View. Before that I wrote for The Economist on a fellowship provided by the Marjorie Deane Financial Journalism Foundation. I have worked at the world's largest hedge fund and read every FOMC transcript since May, 1987.
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