Recall and Vehicle Characteristics Associated with Vehicle Repair Rates

Carfax (2018) estimates that 20% of U.S. vehicles that are on the road have outstanding recalls: they have a known defective part or design. Recalled vehicles represent future costs to manufacturers and pose safety risks to the public. Only two prior studies examine the determinants of recall completion rates—the percent of recalled vehicles that are repaired—and both use cross-sectional data from the 1980s. This paper uses panel data on 677 U.S. vehicle recall campaigns from 2006 to 2015 to identify the correlates of completion rates for the Detroit 3 and the three largest foreign vehicle manufacturers. In addition to using more recent data, we include variables that were not previously examined: multiple recalls, vehicle type, and reporting period. The analysis confirms the earlier finding that domestic manufacturers’ completion rates exceed those of the foreign producers. We also observe higher completion rates on recalls for severe defects, on vehicles under multiple recalls, and on luxury vehicles. In contrast, older vehicles and trucks exhibit lower recall completion rates. The observed patterns in recall completion rates suggest that refinements in how manufacturers estimate recall costs in the litigation process and in strategies to improve completion rates are possible.