March 3, 2021—An new academic study found automakers wait until they can blend into a crowd of other recalls before announcing their own, Car and Driver reported.
The study found that 73 percent of recalls are announced in clusters, suggesting that there is a pattern to recall announcements, rather than recalls being randomly called.
The clustering of recalls reduces the attention paid to any specific recall, thus lessening the negative impact on the stock price and the company’s public perception.
The recall clusters lasted for 34 days on average, and during those periods, an average of 7.6 recalls were announced. The "leading" automaker that prompted a cluster experienced a 67 percent larger penalty in stock price than other automakers that announced recalls shortly thereafter.
The study, entitled “Hiding in the Herd: The Product Recall Clustering Phenomenon,” examined 3,117 automotive recalls over 48 years, from 1966 to 2013.
