Ford, GM and tyre maker Continental are all recalling products. The focus in the automotive industry over the past 12 months has been to protect profitability by reducing costs. But while much of this has been achieved through the reduction of excess capacity, it seems that budget cuts may have led to lower levels of quality.
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The world’s two largest carmakers have both initiated large product recall programmes this week. General Motors, the number one vehicle manufacturer, is to recall 720,000 vehicles in total, while Ford has found fault with its Ka city car and will recall 78,000. Meanwhile, German tyre manufacturer Continental is following in Bridgestone/Firestone’s footsteps in undertaking a major recall, all be it on a smaller scale, by recalling 600,000 tyres.
GM is obviously the hardest hit, with faulty airbags affecting 570,000 Chevrolet and GMC pickups and sport utility vehicles, and a further 150,000 vehicles built between May and June 2002. While the company has not released estimated costs, a recall of such a scale is likely to run into tens of millions of dollars.
Ford has found that some of its Ka city cars have faulty braking systems, affecting 78,500 vehicles, 31,000 of which are in the UK. Continental also has product problems – 600,000 tyres are to be replaced after it was found that the product in question has been losing its tread. Unfortunately for Ford, the majority of the tyres have been fitted to its Ford Expedition and Lincoln Navigator models, echoing the massive recall of Firestone tyres fitted to the Explorer.
While product recalls are not uncommon in the automotive industry, it may be that suppliers and manufacturers are facing lower levels of quality in their products – the result of rapid cost cutting. A balance must be struck between cost reduction and quality control in order to prevent further damaging recalls.
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SOURCE: DATAMONITOR COMMENTWIRE
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