Motor vehicle recalls and their effects on consumer brand perception

¶ … Vehicle Recall on Consumer Perception

Product recall

The effect of vehicle effect on consumer behavior

Vehicle recall and marketing

Effects of recall motor Vehicle Industry

In this research, we evaluate the effects of motor vehicle recalls on consumers' perception of brand and safety. The perceptions of the consumer are evaluated as well as the brands that are susceptible to recalls. Our focus however, is on Ford Motors. The effects of vehicle recalls on consumer safety and brand loyalty are evaluated also investigated. A recommendation of the best vehicle recall framework is presented.

Every year, millions of vehicles costing billions of dollars get recalled to their manufacturers due to safety related defects. This presents a significant amount of concern to the companies that are concerned, their stakeholders as well as customers. In this paper, we explore the various perceptions that customers form of companies that recall vehicles. The effect of vehicle recall on the customer's perception is therefore investigated.

Product recall

Product recall can be described as a request or process of returning either a batch or entire product to the producer due to discovery of defections and safety issues. Recall happens in cases where a product has been detected to have significant substandard quality and is found out to be violating on consumer product safety regulation standard hence dangerous for consumption (Pruitt and Peterson 122). The process of recall begins with a detection of defect by either, the federal agency, producers, distributer, a retailer or a customer. If the defect has been detected by the manufacturer, then they can recall the goods immediately, but if detected by others as stated, it then implies that communication must be done to the company hence needs time to act. It is clear that recall can either be initiated by the affected company or under the directions of a federal agency.Recalls always presents major challenges to manufacturing companies including; serious damage to the brand integrity, reputation of the manufacturing company and hence reduced sales volume (Cheah 428). On the other hand, it can portray a positive image of the company depending why the recall was undertaken. Recalls can be categorized into three depending on the percentage of the product involved in the recall process thus; Major recall where more than 20% of the products are recalled; Medium recall occurs when the manufacturing company recalls products ranging from 10% to 20%; and finally minor recall happens when the manufacturing company recalls products less than 10% (Hartman 368).

Before undertaking the recall process, the company is supposed to set budget aside for the process, this is because the manufacturing company shall be required to meet all the costs including; notification to the customers on the products to be recalled, cost of correcting the defects; transport cost from the customer to the manufacturing company and back. It is also clear that the manufacturing company shall meet indirect cost like damage to the brand quality, bad reputation to the company both leading to reduced profits (Pruitt and Peterson 122).Every year, millions of motor vehicles valued at millions of dollars get recalled by their manufactures due to safety-related defects. Consumers are heavily affected by these recalls since they feel a sense of danger as their lives. This subsequently affects their purchase decision and loyalty. The National Highway Traffic Safety Administration (NHTSA 1) reported about 37,261 road carnage fatalities. It has been observed that most road accidents are caused by the misbehavior and mistakes of the drivers (Bae & Beni'tez-Silva 2). It is however, worthwhile to note that vehicular defects play an important role in the cause of road carnage. Bae & Beni'tez-Silva (1) pointed out that more than 16 million cars were recalled in 2009 alone. Bae & Beni'tez-Silva (2) define safety defect to a problem that a certain vehicle has or that equipment in the vehicle has and that poses a risk to the safety of the vehicle. In order to get rid of the defective vehicles from the road, the NHTSA demands that all vehicle manufacturers recall the defective vehicles and then fix the defects at no cost to the motor vehicle owners. The last couple of decades have seen an exponential increase in the number of motor vehicle recalls. The National Traffic and Motor Vehicle Safety Act mandate the NHTSA to require that motor vehicle manufacturers recall all vehicles that have defects that are safety-related and that could cause the loss of vehicular control. Such defects could affect the steering and braking system and lead to the stalling of the motor vehicle. There are laid down motor vehicle safety standards that must be adhered to by the manufacturers. According to Bae & Beni'tez-Silva (2), the recalls can either be voluntary or involuntary. The voluntary recalls should be communicated by the manufacturers according to the government directives. Failure to comply with the government recall decisions may lead to a legal resolution of the ensuing dispute. The negotiation that occurs between the government and the auto manufacturers is discussed by Tobin (534). The NHTSA also provides the motor vehicle owners with information on how to launch complaints.

The recall process

Since the late 1960s auto mobile manufacturers have been required to give notice to the owners of their vehicles which they feel relates to their safety. Recently motor vehicle manufacturers have been faced with a new source of embarrassment and concern which is known as the auto mobile recall. After products have entered the market place and some sold then defects are apparent. The same are usually safety related. In cases where defects are detected then the manufacturers of the said products may issue a recall of those products that already in market. Recall is a procedure that is taken by a manufacturer to remove a certain product from the market. The process of recall affords manufacturers the opportunity to repair or replace the products that are defective. These procedures are often costly to the manufacturers but cannot be compared to the cost of several law suits that may be file against them or the loss goodwill among the consumers.

The process of issuing recalls varies with the kind of product in relation to the effect that may be caused to the consumer. Manufacturers are required to emend and/or repair at no charge only the defects that do exist at the time and period of the recall. The recall laws do not apply to owners of motor vehicle who had experienced certain problems before a manufacturer announces recall even if they had repairs made at their own expenses. Moreover, the manufacturers will not be liable for any damages caused by the defects. For example, if motor vehicle owners have a defective tire and it blows out which leading to damage to the brake, then the manufacturers are not required to pay for the brake damage.

This therefore means that the consumers that are affected by the recall are wise to have the recall work done as soon as the recall notice is issued. There are however a few exception to the rule of recall. In instances where consumers are able to provide sound and reasonable documentation of damage suffered as a result of a defect, manufacturers of the product have agreed to pay and cover the cost of the damage incurred voluntarily. By doing this the manufacture will be able to repair damage image.

There is however restriction on the consumers' rights to take advantage of the recall process. For example, issues regarding the age of the motor vehicle. There is always a limitation regarding the herein referred issue. In order for one to be eligible for repairs, replacement or refund the motor vehicle must be less than eight-year-old on the date of the defect. It is usually based on the date sold to the first purchaser. In the event that there is a recall of motor vehicle a customer is liable to replacement, repair or refund of the defective part without any charge and that the same should occur within a reasonable time. There are procedures that ought to be followed by the manufacture so as to remedy the consumer after a defect is discovered and then a recall ordered. The manufacturer is therefore given time to develop procedures so as to remedy the defect, to instruct and inform the distributors or dealers of the said product on how to repair the product, to provide the parts that are necessary for replacement or repair and also to communicate to the consumers about how the recall process will be conducted.

Since the recall process involves time consuming steps the manufacturers are therefore given a reasonable time to correct and remedy the defect. The time is usually 60 days which is summed from the time that the parts are available. The manufacturer is therefore required to specify that information in its recall letter.The consumers are highly affected by the recall process of motor vehicle as the process is time consuming and the consumer may be forced to abandon his/her schedules so that he can be able to get replacements, repairs and/or compensation for the damage caused. They may be forced to follow the technical procedures that are related to the recall that may seem time consuming on their part.

In cases where the defect has caused the life of someone then monetary compensation may not suffice as life is deemed precious than the monetary compensation that may be awarded. Recall usually causes a lot of disruption to consumers hence creating a major confusion to the personnel using the product. Disruption will lead to consumers change their plans so as to meet the demands and meet the deadlines set by the manufacturers. States have laws known as lemon laws which are meant to curb and protect consumers who buy new autos against ones that are defective. The defective vehicles are usually referred to as lemons. These laws entitle the aggrieved consumers to a replacements vehicle, or refund as long as the motor vehicle meets certain standards that are set by the law. The National Highway Traffic Safety Administration ( NHTSA) gives the power that require manufacturers to recall all the motor vehicles with safety-related problems that may cause loss of motor vehicle control such as fire, braking, repeated stalling or steering. The NHTSA regulates motor vehicles and motor vehicle equipment.

A report is to be taken to NHTSA within five working days where a manufacturer determines that a safety-related defect or noncompliance with a NHTSA regulation exists in its product. The manufacturer's proposed remedial program is to be included with the report. This remedy will always include a recall of the affected products from the customers' control if the product has made it into the market. Because on-road motor vehicles must be registered with some governmental entity, it is generally easier to find the current owner s and communicate with them than is the case with most consumer products. A manufacturer must also report to NHTSA when a foreign government requires a recall of an identical or substantially similar vehicle or equipment. There is a standard required by manufacturers to maintain known as Federal Motor Vehicle Safety Standard to regulate vehicles in order to sell their vehicles in the market. Even if they comply with the standard, if serious accidents occur or are expected because of potential defects, then a recall is required. The recent massive recalls by Toyota, which have included full product lines and over 6 million vehicles (in the U.S. alone), have brought the issue to the front pages around the globe, and have prompted some to suggest the need for the government to better regulate the vehicles that manufacturers put on the road.

Types of recalls

Effect of vehicle recall on consumer perception

Vehicle recall gives the affected motor vehicle company a bad image. Ahluwalia et al. (204) pointed out that negative publicity can have a detrimental effect on the perception of consumers. Product recalls are made by companies at their own volition or with the demand from the government. Both forms of product recall have been indicated to be carried out as a result of the potential risk as that they pose serious safety risk to the consumers as pointed out by (Mowen et al.,1981). The numbers of recalled vehicles as pointed out earlier are continuously increasing. The 2004 Consumer Reports pointed out that in 2002 alone, about 19 million motor vehicles were recalled.De Matos and Rossi (113) pointed out that despite the increase in the number of vehicle recalls as well as the potential negative effect on the consumer brand perception, very few research studies have been dedicated to the empirical investigation of the consumer processing of the negative information as well as the factors that affects the process of developing negative perception. Siomkos and Kurzbard (283) pointed out that most of the marketing literature regarding product recall has a sharp inclination on the managerial aspects as well as business case study.

Product recall

A large number of marketing studies regarding product recall are from the domain of public relations. These literatures have a focus on the managerial techniques of implementing product recalls Smith et al. (1996) as well as on risk assessment and management regarding product recall (Siomkos and Kurzbard, 283). Yet again, not much empirical studies have been dedicated to the examination of how the consumers do perceive as well as react to the needs of product recalls. Mowen (405) pointed out that few studies have been dedicated to the study of the variables that influence the process of perceiving the influence of product recall on a given product. Mowen (405), employed the experimental approach in the manipulation of variables like the consumer knowledge of a given company that is recalling its products. The outcome was that consumers perceived companies that are well-known (familiar ones) to be less responsible for the product defects as compared to the unfamiliar companies. Studies indicated that companies that sprang into action prior to the intervention were perceived by consumers as less responsible.

Mowen et al.(405) in a non-experimental study surveyed 200 consumers with the aim of investigating the perception that they had for four firms that had performed product recalls. Ford was one of the firms that were surveyed. The other three were Corning Glass Works, Forestone and Conair. Their study indicated that the reactions of the consumers were heavily influenced by the fact that the recall knowledge had been imparted on them and the knowledge made them to perceive danger of the product that is defective. The perceived level of the companies for the defects was also a factor. Their work also pointed out the fact that the number of product recalls would increase with time due to the increasing level of consumer activism that emerged in the early 1960s, the involvement by government agencies on product activism. Such organization include Consumer Product Safety Commission as well as the Food and Drug Administration. The increasing complexity of product was also mentioned as a factor.

Product recalls are a source of negative publicity and can result in a severe damage to corporate image. In an effort to decrease the level of negative publicity that can be created by product recalls on the overall computer behavior, the forms initiating product recalls should adequately emphasize that they are making the move for the sake of corporate social responsibility as pointed out by Mowen et al.(405). The other factors that can effectively influence the manner in which consumers perceive the product recall information are the source of the information as well as how the information is relayed by the media. Another study indicated that the product recall information was perceived by the consumers to be more objective if it was channeled/sourced from the government and not by the firm itself. The print media was also perceived as being trustworthy and more objective.

Most of the existing literature on the recall of products puts a lot of emphasis on the part of management issues (Souiden and Pons, 106). Most of these available studies have particularly analyzed on the managerial issues such as; best ways to implement the product recall campaign how to manage the product crises once they happens (Siomkos and Kurzbard, 274); while others have majored on how to minimize the impact of product recall crisis on the capital market shares All the mentioned studies provide emphasis on the importance of a manufacturing company's preparedness to deal with product recall once it occurs. It is therefore important that every manufacturing company should have a clear plan on how to manage product recall crisis, the plan should be very clearly understood by all on what to do once a crisis is detected and who to report to if you detect a crisis on their products.

On developing such plans, the manufacturing company should put into consideration the fact that the process should collaborate all sectors including marketing, legal, distribution, safety all involved in sale experiences. The plan should also consider on how consumers can get positive information during product crisis, this is because most of the times consumers often receive negative information about the products and the concerned company, this helps in shaping their attitude towards the company once a product crisis is detected (Siomkos and Kurzbard 274).

The management of manufacturing company should take note that there are several factors which influences the success of a product crisis including; Corporate reputation where companies which has had good reputation before may have limited reputational damage due to product crisis; secondly; the impact of information relayed by the media as concerning the crisis can shape the opinions negatively or positively; and thirdly; how the company responds to the crisis depending on whether the recall was initiated with the company or the recalling company has decided to recall the products under the directions of a federal agency (Siomkos 28), there is high likelihood that in cases of voluntary recall the customers will trust the company that when the company has decided to work on a recall under a direction of a federal agency concerned (Siomkosand Kurzbard 274)

Even though there are several number of researches and studies which elaborates on product recall from the management of view, a few experimental studies which investigates the customers reactions to the product recall process have also been undertaken including; analysis of factors which influences customers judgment on motor vehicle recall in Brazil (Vargas Rossi and De Matos 113) where the researchers concluded that several factors can attribute to the customers reactions to product recall process including social corporate responsibility, reasons for recalls and what customers perceived to the dangers involved in the defects.

It is very clear that even this stream of available research wok has not been able to consider the perception of the customer towards the way crisis and communication has been managed by the companies. In practical, the company which is undertaking recall process should portray clearly to their customers that they are working on a socially responsible manner (Mowen et al. 1981). Managers should learn to know that customers may have a contrary view to the company's action even though the company might be acting responsibly by dealing with the product crisis. Hence the company should be able to have a strategy of dealing with the negative perceptions of the customers which might spread even after the crisis.

The way in which the manufacturing company shall handle the perceptions of the customers matters a lot and can be justified in different ways including; the attitude of the customers toward a company after the crisis depends on how the same customers perceived the company to have dealt with the recall crisis, if the customers feels that the company responded responsible to the crisis, then the customers will have positive perception towards the company the reverse is also true; In some cases, the customers may see that the company is managing the product recall in an opportunistic way, this is likely to create a negative perception of the customers towards the company.

In the marketing world, it is very clear that reputation which is accorded to a particular brand of a company's product distinguishes the company with her competitors hence providing the company with benefits over others including; enabling the company to have easy access of finance, the brand also offers protection to the company against introduction of others in the market; provides the company with an opportunity to request for prices increases (Podolny 1993)

Contradictory role of company's reputation in relation to the effects of a product recall campaign has been highlighted by the previous literature. The reputation of a particular brand is capable of creating customers expectations in the mind of the customers about the quality of the products of a company . Once a company have a good reputation, the good reputation mitigates automatically mitigates the consequences of product recall process.

From the above reasoning, different point can be raised on how reputation of a brand can lead to moderating impact of effective product recall crisis management, the reasoning includes; first, there is high likelihood that in a case where customers have perceived that the company is managing the product recall process in a responsible way, the customers attitude towards the company will always improve sustainably provided that they had high brand reputation before. Secondly, on the other hand, in a case where customers perceived that the company is managing the product recall process in an opportunistic way, the attitudes of the customers is likely to deteriorate significantly provided that they perceived the brand to be of high quality before the crisis.

The effect of vehicle effect on consumer behavior

According to the work of Siomkos and Kurzbard (274) who presented three factors that directly influenced the intensity of the product recall impact on the behavior of consumers, the level of crisis management, reputation of the company as well as other external factors such as the media and government agencies form the main factors. This is because they may have negative or positive impact on the consumer behavior. Siomkos (27) pointed out that should the affected company be having a good reputation as well as a good communication strategy, then the effect is positive. This results in diminishing the negative impact of motor vehicle recall.

On the contrary, if a company having a reputation that is average recalls its products involuntarily due to pressure from the government agencies, then the consumer purchase intention can be affected negatively. This therefore indicates that the reputation of the company plays an integral moderating role on the impact of product recall. These outcomes to concur with the ones found by Jolly and Mowen (473). They found that the level of delay in the period of product repair by the manufacturer, type of product recall and the number of product recall by the competitor firms are the main factors.

In an effort to understand this scenario, Siomkos and Kurzbard (274) made the same conclusion as well as proposed a though analysis of the available options that can be assumed by firms that were faced with an impending product recall. Weinberger et al. (23) on the other hand explored the negative impacts of product recall of certain approaches that are adopted by vehicle manufacturers. He found out that vehicle manufactures who failed to acknowledge as well as deny the cases of product defect created poor consumer perception of their company and the brand image. Studies like these indicated the importance of adopting an effective recall techniques as well as crisis management by the manufacturers. These studies however never allowed for the measurement of the attitude of the consumers in relation to the procedures of recall.

Vehicle recall and marketing

Voluntary recalls have been seen to offer a perfect marketing opportunity since the affected company can use it to display their ethical behavior.The opportunity can also be used by the affected company to reduce both the profitability and image losses. Several authors have pointed out those different strategies of product recall produces different effects .Others found out that the product recalls that were government initiated offered very low signal and ended up damaging the brand image from the perspective of the shareholders as opposed to the ones that were initiated by the automobile manufacturers. On the other hand, Haunschild and Rhee (101) discovered that firms that initiated voluntary product recalls usually obtain higher learning effect and generally experienced a decline in their future rates of recall. Other authors pointed out the existence of passive as well as proactive product recall strategies. The proactive recall strategies were shown to result in greater negative losses of share as compared to the passive ones. This was attributed to the fact that the proactive product recall strategies signal greater financial losses by the company as opposed to indicating corporate social responsibility. Several researchers have dedicated their work on the effects of product recalls on consumer safety (Ashenfelter & Greenstone 226). There is however no quantitative study of the same. Hoffer (96) and Crafton, Hoffer, and Reilly (700) focused on the effect of product recalls on the customer demand for the automobiles while Rhee and Haunschild (101) studied the impact that it has on the reputation of the manufacturers.

Motor vehicle market has been in the boom for the past few years, this has mainly been due many factors including, competition from the motor vehicle manufacturing companies, reduced cost of production including man power and materials, Increased technological advancement and increased demands for the motor vehicles. The total sale of sports cars, normal, premium luxury and entry luxury salons are of the order of over millions of motor vehicle per year. Motor vehicles have ready market in the whole world with leading consumers being the developed countries including; United States of America, Germany, United Kingdom and Japan.

Major motor vehicle manufacturing industries have been putting emphasis on the product quality for the consumer's money over the past few years. Many quality slogans including "Putting quality on the road" by the General motors' (GM) manufactures to "quality is job" by the Ford Automobile company combined with a myriad of J.D. Power consumer satisfaction index rankings have been used increasingly to market new vehicles to the United States of America consumers. It is therefore very important to note that the National Highway traffic safety Administration in United States of America has been providing information on the product quality for the American citizen over the last four decades. This follows the passage of National Traffic and Motor vehicle safety Act in 1966, through this act, manufactures have been forced to recall over 200 million motor vehicles which are suspected to have safety

News of auto recall has been prevalent in the international news headlines in the past year. Toyota Company was forced to recall millions of vehicles in the year 2009 due to safety concerns. This created confusion to the customers who had already purchased Toyota products because they did not know which models of Toyota was affected; this in fact affected the Toyota brand. The first Toyota recall was due to assistance of the United States National Highway Traffic Safety Administration (NHTSA). This followed a report that several Toyota vehicles were experiencing unintended acceleration problems. The first recall was meant to correct possible incursion of an incorrect or out of place front driver's side floor mat into the foot pedal which was projected that it could cause pedal entrapment. After the recall which was made by Toyota in the year 2009, it was very apparent that the consumers trust in the world's leading motor vehicle Company Toyota was depreciating. In the year 2010, American drivers felt that Ford had made a very significant improvement in their car safety and quality since the first cars recall by Toyota in 2009, the same divers perceived that Toyota had made a dramatic drop in the safety of their motor vehicles (Consumer Reports National Research Centre, 2010)

Generally, product recalls have been in the increase over the last decades particularly in the automobile industry reporting the highest recalls worldwide. In the United States of America which is the leading consumers of motor vehicle, the number of vehicles recalled in 2004 reached over 29 million. This figure was slightly above the highest reported in 2000 which was 24.6 million motor vehicles leading to massive loss by the motor vehicle manufacturing companies due to the cost of transporting the vehicles from the customers for repairs and back. It also impact indirect cost of the companies' reputation in the markets.

Even though the recall of motor vehicles by the automobile companies is not a new occurrence in the history of motor vehicle industry, what makes consumer worried most is the ever changing reasons for car recalls and the fact that motor vehicles can lead to accidents. The first automobile recall in the world can be traced as back as in the 1966 which was reported in United States of America. Since this first recall, the American National Highway Traffic Safety Administration (NHTSA) which is charged by the responsibility of checking the safety of the motor vehicles has been. The number of academic researches on the investors and consumers behavior concerning this recalls have been very minimal. It is only in the last decade that some research studies were conducted to determine the impact of motor vehicle recalls on the product and capital markets. In their research, Crafton, Hoffer and Really (700) found out that several safeties related recall campaigns adversely affects the sales of new cars of the recalled model. In the other research, methodology studies have been used to investigate the impact of automobile recalls on capital markets (Jarrell and Peltzman, 513) where Jellellel and Peltzman (532) concluded that capital markets do penalize firms whose products had been recalled for more than the direct cost of the recall campaign, while Pruitt, Reilly and Hoffer also supported the same idea.

In the recent past in the year 2000 and beyond, there has been optimum quantity of modeled recalls. The major challenge has been that there is very little research work which focuses on the success of recall campaigns in terms of achieving the immediate goal of entirely correcting the safety related defects in the current automotive stock. Three reasons have been provided in support to the raised concern raised as follows. First, it is very clear that the manufacturing companies have not been publicly announcing some of the campaigns, it is therefore very important to ascertain consumer's responses to such campaigns for recalls that were never publicly announced. Secondly; that the knowledge about the variable which forms the basis for the recalls and determines the response rate including motor vehicle problem severity have sometimes lead to changes in the notification process which enhances the overall return rate hence increased vehicle safety. Finally, the motor vehicle companies are likely to find this information more useful toll in projecting the level of support necessary to accommodate the repairs under a particular recall campaign

Legal and environmental perspective

Since the recall of first motor vehicles in 1966 in the United States of America, the congress passes a n act to safeguard the road safety "The National Traffic and Motor vehicle safety Act of 196." This act has been under the administration of National Highway and Traffic Safety Administration (NHTSA) which is a department of Transport. The main aim of this legislation was to reduce by large margins traffic accidents and consequent economic and social costs which were experience in United States of America, this public body was to do this through encouraging motor vehicle manufacturers to produce safer vehicles which meets federally determined standards and rules. They were then charged by punishing the motor vehicle companies which fails to produce vehicles and equipments which does not meet the set standards in the United States of America.

Since the enactment of this act into law in 1966, the secretary of Transport is the one who is charged with spearheading the fight for having safety standards in the United States of America. The transport department has been setting standards not only for new motor vehicles but also for other types of complementary and after market replacement equipment. In setting standards regulations, approximately 75% applies to new vehicles and each standard applies to a separate subject area. The ever visible component is the manifestations of standards noncompliance in the motor vehicle or equipment recalls. This body has been reporting to substandard motor vehicles and equipments hence forcing the motor vehicle manufacturers to either voluntarily recall the motor vehicles or they are forced to recall under the directions of National Highway and Traffic safety Administration's influence.

Under their directives, National Highway and Traffic safety Administration has directed that when undertaking motor vehicle recall campaign, motor vehicle manufacturing companies must notify owners of the recalled vehicles by first class mail to make repairs at no extra cost to the client, the statute requirements is that the general public should not be notified on the same.

Effects of recall motor Vehicle Industry

In general, customers have been having different reactions as over the different types of motor vehicle recall campaigns. As it will be realized customers will always have an attitude towards automobile company as regarding the type of recall campaign undertaken (Siomkos and Kurzbard 274)

It is reported that once the National Highway and Traffic safety Administration identifies a safety issue with a motor vehicle or parts, they will first notify the affected motor vehicle manufacturer and then follow by informing the public. In a case where they have recommended a recall and the manufacturer denies that there is no problem with their models and in some cases refuses to recall them or in a case where the National Highway and Traffic safety Administration oblige the manufacture to withdraw their motor vehicles model for repairs in order to meet the set standards. In this case the image of the manufacturer shall be negatively affected due to the fact that the company denied or refused to recall vehicles which are not meeting safety standards.

On the other hand, it is highly possible that the image of a company can also be positively affected and its public relations improved when they voluntary recalls their motor vehicles for repairs (Siomkos, and Kurzbarnd 275). This is because, to the public, the manufacturer shall be demonstrating that they accept total responsibility for the mistakes which might have occurred without their knowledge and hence they are seeking to provide their customers with new products. This type of recall in one way or the other changes the perception of the consumers change from looking into the dangers he was exposed before to the quality of service promised. This voluntary recall has also been used by several companies to build their image; companies have been increasing their Brand capital through what is called "super effort" (Shrivastava and Siomkos 27) or improvement campaigns which is not proposed by the government agencies. These recalls came out from the internal decision which aims at recalling models which have been noted to have very minor defects which do not constitute to passenger safety; the motor vehicle companies then initiate a recall campaign to improve their products. In undertaking the process, the company demonstrates the concern by providing a superior quality of products and in the process creates an image of a reliable brand.

The above analysis provides enough evidence on several factors that may enhance or diminish the success of the motor vehicle campaign to the manufacturing company. As in the case, it is very clear that achieving compliance by manufacturers who has totally denied any defect or have boon forced by National Highway and Traffic safety Administration to recall older model cars and vehicles with perceived severe safety problems will always require additional efforts in convincing consumers to have trust in them again.

Discussions

Motor vehicle recall is a common occurrence in the industry today. This rising trend impact the consumer perception in many ways especially at this time when road transport is most popular compared to other means of transportation. Although there is steady increase of motor vehicle recall, little has been done to explore how it affects the consumers perceptions. One key effect of motor vehicle recall is brand erosion. When motor vehicle companies announce recalls they draw attention from the market and more so the consumers. According to a 2008 Consumer Reports that focused on consumer perception on motor vehicle, brands indicate that 63% of new car shoppers consider safety as a key factor. Safety therefore is an important aspect of brand development and the image of any motor vehicle. Sauden & Pons (107) assert that when manufacturers contest recalls, the impact on consumer loyalty and purchase intentions is significant. The deduction is that brand erosion is inevitable as consumer confidence diminishes due to motor vehicle recalls. Nonetheless, recalls are particularly damaging to Ford Motor Company, which has built reputation on safety and dependability . In a study done by De Matos & Vargas Rossi (113) motor vehicle recalls, is a negative publicity and severely damages the company's image. In addition, one of the effects of motor vehicle recall on consumer perception could be positive depending on the timing of recall. Preemptive recall by motor companies is good publicity. According to Zwitter, in 2009 Ford Motor Company announced a preemptive recall of all 6.1 million-model year 2011 cars. This was the first time a motor vehicle manufacturer did a recall before the first robot drilled the first rivet He agrees that the move was smart and that the move was to sustain the brand strength.

Ford is a better performer than Toyota in quality perception

Ford is a better performer than Toyota in the level of consumer quality perception according to Hirsch. According to Consumer Reports' 2011 Car Brand Perception Survey (Consumer reports), Honda was ranked the first brand in the survey with about 25% of car owners claiming that it is the manufacturer having the best product quality. Ford came second with a 23% score followed by Toyota that had 19% with a ranking that was reached at after a combination of several factors like safety, value, quality, performance, technology/innovation,, environmental friendliness as well as design and style. The next spots were occupied by Chevrolet that had 16% and Mercedes-Benz that had a total of 15%. These statistics were accompanied with increase in sales with Ford outselling Toyota for the fists time the previous year after a period of four years. The Toyota intense promotional campaign regime after its earlier publicized and deadly vehicle recalls worked by improving its brand perception to a very high level in terms of safety, performance, quality and value.

What future research should consider in terms of directions and observable limitations

Most of the existing research has a deep emphasis on the effect of recall type on the image of the manufacturer, purchase intention and customer loyalty. There are several factors that could be having a moderating effect on the image of the manufacturer, purchase intention and customer loyalty that have not yet been factored into the investigations (Sauden and Pons 112).

The effect of media

The current research has not taken into great account the effect of media on the image of the manufacturer, purchase intention and customer loyalty. Siokomos (12) pointed out that media plays an important role in the level of risk perception. Jolly and Mowen (473) pointed out that the information that is passed out by governmental agencies and media have a great role in the influence as well as credibility of risk perception as compared to the one released by the manufacturers themselves.

The level of recall severity

Sauden and Pons (112) further pointed out that most research neglects this factor on the risk perception of product recall. Hoffer et al. (96) pointed out that there are several factors that affect the level of risk perception due to product recall. They pointed out that there are recalls as a result of mechanical problems that can cause serious harm to the passengers and those that do not pose any serious harm. The nature of recall has therefore been shown to reflect its severity. It has also been shown that product recalls of motor vehicle shaving serious defects have a particularly short-term negative effect on the demand of the recalled vehicles as well as the remaining vehicle models by the same manufacturer.

Repeated vehicle recalls

The effects of repeated vehicle recalls on the image of the manufacturer, purchase intention and customer loyalty have also not been considered in most of the research. Sauden and Pons (112) pointed out that it is very possible for consumers to easily make connection between the image of the manufacturer, reliability of a product and the frequency of product recalls. The manufacturers who issue frequent product recalls are therefore perceived as producing inferior products. A high frequency of recalls therefore harms the image of the manufacturer and reduces the level of customer loyalty.

Conclusion

A close examination of literature reveals that customers perceive the motor vehicle recalls as positive moves by the government and the manufacturers to protect their lives and well-being. On the other hands, consumers perceive the involuntary recall by firms as a sign of poor corporate social responsibility as well as lack of good leadership. In this research we also investigated how the customer's would perceive the behavior of a manufacturing company during managing of the product recall crisis. Through the above discussions, it has been demonstrated that in cases where customers perceive that the company is addressing the product crisis in an opportunistic way, chances are very high that they will have a negative attitude towards the company. On the other hand when customers perceive that the company is addressing the product recall campaign in a responsible manner, the attitude of the customers towards the company shall be on a positive side. The stated findings confirms the recommendations of other studies which had suggested that companies should be ready and willing to undertake voluntary recall campaigns and in the process make emphasis that they are acting on a socially responsible manner (Mowen 405) and on the other hand the company should avid at all cost, acting on a manner that the customers will perceive the company to be opportunistic, thus the customers should be convinced that the company is not trying to exploit the situation