Former Mitsubishi President, Katsuhiko Kawasoe, was sentenced in Japan last week for professional negligence for his role in covering up defects in Mitsubishi trucks in cars over a three-year period from 1997 to 2000. Apparently, the auto manufacturer hid defects in its clutch system on several models of trucks and cars. The defect caused the brakes to fail. In some cases, occupants were killed in collisions caused by the faulty system. Wrongful death suits arising from these collisions uncovered the scandal.
Mitsubishi hid reports of defects, choosing to secretly repair the cars when brought into dealerships rather than issue a product recall that would have protected consumers. When news of the cover-up came out, sales plummeted, and company officials were forced out in disgrace. Subsequently, those officials were charged with professional negligence and criminal violations for falsifying reports and failing to take proper recall measures.
In the United States, the National Highway Transportation Safety Association (NHTSA) has issued its 2007 recall report. Automobile recalls increased in 2007 by thirty percent from the previous year. Manufacturers issued 588 recalls, affecting almost 15 million vehicles.
Recalls have increased over the last seven years partly due to the Federal TREAD Act (Transportation Recall, Enhancement, Accountability and Documentation) passed in 2000. The TREAD Act was enacted after congressional hearings established that recalls of defective tires could have occurred sooner if the NHTSA had obtained reports of tire problems from the manufacturer in a timely manner. The Act arose in response to the recall of 10 million Firestone tires in 2000. However, the Act covers only tires.
Ford Motor Company issued the most recalls in 2007. Daimler/Chrysler came in second for the total number of recalls. General Motors and Toyota, both covering a large part of the auto sales market, had a decline in the number of recalls issued.
Ford felt the sting in 2007 when it recalled 3.6 million vehicles for a faulty cruise control switch that lead to fires. Combined with recalls in past years for the same defect, this was the largest recall ever.
Volkswagen recalled nearly a million 2007 Beetles for a faulty brake light switch. Sales of the Beetles fell by thirty percent as well.
Recalls hurt manufacturers directly with unexpected costs and indirectly with a decrease in sales and harm to the overall brand. However, recalls benefit consumers by identifying problems before accidents occur. Ultimately, recalls should lower product liability claims.
In the past, some automobile manufacturers, as the Mitsubishi scandal detailed, put corporate costs over consumer safety. With strong federal regulation and adherence to safety requirements, hopefully, in the United States, manufacturers will bear the cost of product defects in the recall arena rather than through product liability litigation.
However, if you believe that you may have a product liability claim or if you were in an auto accident that may be related to a product defect, contact the law firm of Robert N. Katz for a free, private consultation.