4th Annual Automotive Industry Warranty & Recall Symposium Global Financial Advisory Services
Agenda 8:15 to 9:15 a.m. – SRR Presentation and Q&A 9:15 to 9:30 a.m. – Break 9:30 to 10:15 a.m. – SRR Presentation and Q&A 10:15 to 10:30 a.m. – Break 10:30 to 11:45 a.m. – Cost Recovery Panel and Q&A
Agenda – News and Recall Data 2016 Recap Regulatory and legislative developments Takata update Recall and Defect Overview Year in review General trends and observations Supplier identification Design, manufacturing, and assembly related defects Completion Rate Overview
Agenda – Other Trends Motor Vehicle Defect Petitions Petitions for Inconsequential Non-Compliance International Markets Integrated Electronic Components and Software Defects Warranty and Recall Cost Recovery Things to Look For: Future Expectations Panel Discussion
2016 Recap
Headlines from 2016 - Timeline
Headlines from 2016 – Record Recalls Record 52 million vehicles recalled in 2016 in nearly 350 separate recalls Exceeded record-breaking 50 million vehicles recalled in 2015 Largest non-Takata inflator recalls were initiated by General Motors, Nissan, and Ford General Motors sensing and diagnostic module software defect (3.6 million), Nissan occupant classification system (3.3 million), and Ford door latches (2 million) – together representing nearly 9 million of the approx. 30 million non-Takata recalled units. Takata air bag inflators linked to about 44% of recalled vehicles in 2016 29,000,000 vehicles were recalled in 2016 exclusive of the Takata inflator recalls
Headlines from 2016 – Recall Sizes Largest individual recall of 2016: Issued by FCA related to Takata airbag inflators Affected 4,757,203 vehicles Largest non-Takata recall of 2016: Issued by General Motors related to sensing and diagnostic module preventing the deployment of air bags and pretensioners Affected 3,640,162 units Smallest recall of 2016 affected 1 unit Mercedes Benz recalled one CLA45 AMG for a potentially defective weld between the clutch disk and hub that may develop a crack
Headlines from 2016 – Advancing Autonomous Technology On March 17, 2016, NHTSA and the Insurance Institute for Highway Safety (“IIHS”) announced the commitment of 20 automakers, representing more than 99% of the U.S. auto market to make automatic emergency braking (“AEB”) a standard feature on new vehicles as of September 1, 2022. “ NHTSA estimates that the agreement will make AEB standard on new cars three years faster than could be achieved through the formal regulatory process. During those three years, according to Insurance Institute of Highway Safety (IIHS) estimates, the commitment will prevent 28,000 crashes and 12,000 injuries.” 1 On April 1, 2016, NHTSA proposed an Enforcement Guidance Bulletin in regards to automated driving technologies: “This Enforcement Guidance Bulletin sets forth NHTSA's current views on its enforcement authority—including its view that when vulnerabilities in automated safety technology or equipment pose an unreasonable risk to safety, those vulnerabilities constitute a safety-related defect—and suggests guiding principles and best practices for motor vehicle and equipment manufacturers in this context.” 2
Headlines from 2016 – Other Regulatory Activity Effective March 21, 2017, a new safety standard regarding minimum sound requirements in hybrid and electric vehicles (with gross vehicle weight 10,000 pounds or less) became effective. 4 As of June 1, 2016 NHTSA requires that rental car companies must fix any and all safety defects before renting vehicles to customers, as required by the FAST Act of 2015. 5 On October 24, 2016 NHTSA proposed cybersecurity guidance to protect vehicles from malicious cyber-attacks and unauthorized access, focusing on layered solutions to ensure vehicle systems are designed to take appropriate and safe actions, even when an attack is successful. 6 On December 13, 2016, the US DOT issued a Notice of Proposed Rulemaking which would enable vehicle-to-vehicle communication on all new light-duty vehicles, enabling new crash-avoidance applications that could prevent deaths by helping vehicles talk to each other. 7
Headlines from 2016 – Takata Update By 2020, 64 – 69 million inflators will be recalled 7 As of January 6, 2017, the overall completion rate is 37.5% 8 Third Amendment to the Coordinated Remedy Order Issued December 9, 2016 OEMs Affected: 19 As of December 2016 in the US: 9 11 fatalities 184 injuries
Headlines from 2016 – Takata Update Takata Corp. Agrees to Plead Guilty on January 13, 2017: $1 Billion Fine: $25 Million Restitution: $975 Million Settlement Finalized on February 27, 2017 10 December 2016, three Takata executives (who worked for Takata in US and Japan) charged with indictment for committing wire fraud and conspiracy 11 In December 2016, the ACRO set forth a variety of new and additional requirements for affected OEMs
Data Analysis and Review: Recall and Defect Overview “Big Picture” and Year in Review – The Current Automotive Recall Landscape General Trends and Observations Supplier Focus (573 Letter Review)
Recall Data Analysis: Process and Background Information downloaded from NHTSA website (www.nhtsa.gov) for historical recalls dating back to 1966 NHTSA data provided detail regarding NHTSA campaign number, manufacturer, model and model year, component, total units affected, and certain additional fields SRR summarized, “scrubbed”, and analyzed the data to analyze recall trends for OEMs across various component groupings and timeframes
A Big Picture Look Overall Recall Trends (By Year): Unique Campaigns and Vehicles Affected by Year Vehicles Affected Takata Vehicles Affected Unique Campaigns 60 350 300 50 Units Affected (in Millions) 250 40 Unique Campaigns 200 30 150 20 100 10 50 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Contains data for BMW, Daimler AG, FCA, Ford, General Motors, Honda, Hyundai, Isuzu, Kia, Mazda, Mitsubishi, Nissan, Subaru, Tata Motors, Tesla, Toyota, Volkswagen, and Volvo. Identified from dataset updated through 2016. Source: NHTSA Recall Data
A Big Picture Look Broad Trends by Component Group (2000-2016): Unique Campaigns by Component and Year Seats 350 Exterior Lighting 300 Suspension Visibility 250 Unique Campaigns Electrical System 200 Seat Belts Steering 150 Fuel System, Gasoline 100 Power Train Multiple 50 Air Bags 0 Other 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Contains data for BMW, Daimler AG, FCA, Ford, General Motors, Honda, Hyundai, Isuzu, Kia, Mazda, Mitsubishi, Nissan, Subaru, Tata Motors, Tesla, Toyota, Volkswagen, and Volvo. Identified from dataset updated through 2016. Source: NHTSA Recall Data
A Big Picture Look Broad Trends by Component Group (2000-2016): Vehicles Affected by Component and Year Other 60 Seats Exterior Lighting 50 Suspension Vehicles Affected (in Millions) 40 Visibility Electrical System 30 Seat Belts Steering 20 Fuel System, Gasoline Power Train 10 Multiple 0 Air Bags 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Contains data for BMW, Daimler AG, FCA, Ford, General Motors, Honda, Hyundai, Isuzu, Kia, Mazda, Mitsubishi, Nissan, Subaru, Tata Motors, Tesla, Toyota, Volkswagen, and Volvo. Identified from dataset updated through 2016. Source: NHTSA Recall Data
A Big Picture Look Air Bag Components (2014-2016): Unique Campaigns of Air Bag Components and Year Air Bags: Passenger Occupant Classification 80 System Air Bags: Passenger Side 70 Frontal Air Bags Roll Protection 60 Air Bags: Knee Bolster Unique Campaigns 50 Air Bags: Frontal: Sensor/Control Module 40 Air Bags: Frontal: Driver Side Inflator 30 Module Air Bags: Side/Window 20 Air Bags: Frontal 10 Air Bags 0 2014 2015 2016 Takata Inflator Contains data for BMW, Daimler AG, FCA, Ford, General Motors, Honda, Hyundai, Isuzu, Kia, Mazda, Mitsubishi, Nissan, Subaru, Tata Motors, Tesla, Toyota, Volkswagen, and Volvo. Identified from dataset updated through 2016. Source: NHTSA Recall Data
A Big Picture Look Air Bag Components Across All Datasets: Source: NHTSA TSB, Recall, Investigations, and EWR Data
Year in Review: Another Historic Year for Recalls Units affected by recalls in 2016 narrowly edged the record setting totals in 2015 Recalls of Takata inflators played a significant role Still a very active year for other recalls with approximately 29 million units affected by non-Takata campaigns. In addition to the increase in Takata inflator recalls, increases in the number of other frontal and side airbag, as well as occupant safety classification system recalls were experienced in 2016.
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