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Auto recall bill grew 26% to $22bn in 2016, study says

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A new study highlighting the flurry of U.S. automotive recalls asserts that automakers and suppliers remain focused on innovation and cost cuts while vehicle quality takes a hit.
The study, “The Auto Industry’s Growing Recall Problem — and How to Fix It,” shows that automakers and suppliers paid almost $11.8 billion in claims and recorded $10.3 billion in warranty accruals for U.S. recalls in 2016. That $22.1 billion total is an estimated 26 percent increase over the previous year.
Michael Held, enterprise improvement director at the global consulting firm AlixPartners, which led the study, told Automotive News that automakers and suppliers totaled an estimated $17.5 billion on claims and warranty accruals in 2015. The number of vehicles recalled in the U.S. in 2016 rose 4.5 per cent to 53.1 million, from 50.8 million in 2015 –making 2016 the highest year on record, the study says. Nearly half of those recalled vehicles were attributed to Takata Corp.’s defective airbag inflators or General Motors’ faulty ignition switches, which combined for 23 million.
In addition, suppliers’ share of total recall costs has tripled from 5 to 7 percent from 2007 to 2013, to 15 to 20 per cent since 2013, according to the study, while “the frequency that suppliers are named in recall notices has doubled.”
Infotainment
According to the study, the number of recalls related to electronic and electrical systems has risen nearly 30 per cent per year since 2013, compared with 5 per cent annual increases from 2007 to 2013. This signals a growing interest in more sophisticated infotainment and safety systems, the study says.
Recalls related to system integration can affect greater numbers of vehicles than can manufacturing problems, which are often restricted to one plant or region and a limited time frame, the study says. “Because most automotive OEMs have adopted global platforms, there is now far less local variation in vehicle content,” the study says. “As the number of vehicles using similar systems increases, so do the number of issues detected since the larger production volumes attract closer observation. As a result, recall notices are increasingly likely to involve not thousands but millions of vehicles.”
Total cost of quality
As automakers focus on profit and cutting costs, the study estimates that automakers and suppliers have slashed spending on quality functions by 30 to 50 percent since the start of the Great Recession. “There’s little evidence that OEMs are moving aggressively to address these issues,” the study says. “In fact, most of them can’t (or at least don’t) quantify for investors how much quality shortfalls are costing them.”

The study recommends that companies calculate the total cost of quality by measuring the costs associated with finding defects before the vehicles hit the market, as well as warranty and recall costs.

“As they undertake these transformations, many companies are learning that they don’t have a handle on the cost of quality,” the study says. “As a result, have difficulty prioritizing emerging issues before vehicles or components reach the marketplace.”

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AutoBeat / Auto Trends

Motoring Tips: 38 FRSC Traffic Offences & Their Penalties

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If caught violating a traffic rule and you wish to wave your right to a court trial, the alternative is to pay the prescribed fine for the particular offence.

In line with our vision to engender an enlightened society with emphasis on the automotive sector, Autojosh presents a list of FRSC traffic offences together with their corresponding penalties.

  1. Traffic/Sign violation

•Penalty: N2, 000

 

  1. Road obstruction

•Penalty: N3, 000

  1. Route violation

•Penalty: N5, 000

  1. Driver’s Licence violation

•Penalty: N10, 000

  1. Dangerous driving

•Penalty: N50, 000

  1. Speed limit violation

•Penalty: N3, 000

  1. Vehicle Licence violation

•Penalty: N3, 000

  1. Driving under alcohol or drug influence

•Penalty: N5, 000

  1. Driving with worn-out tyre or without spare tyre

•Penalty: N3, 000

  1. Driving without or with shattered windscreen

•Penalty: N3, 000

  1. Overloading

•Penalty: N5, 000

  1. Driving without seatbelt

•Penalty: N2, 000

 

  1. Driving a vehicle without forged documents

 

Penalty: N20, 000

 

  1. Failure to report an accident

 

Penalty: N20, 000

 

  1. Vehicle number plate violation

 

Penalty: N3, 000

 

  1. Wrongful overtaking

 

Penalty: N3, 000

 

  1. Road marketing violation

 

Penalty: N5, 000

 

  1. Caution violation

 

Penalty: N3,000

 

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AutoBeat / Auto Trends

Hyundai posts strong April 2018 global sales

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Hyundai Motor Company, South Korea’s largest automaker and No.1 Selling Korean automaker in the world, has announced its global sales results for April 2018, posting a total of 391,197 units sold, up 11.1 per cent from a year earlier.

The highest growth since December 2014 was led by strong sales of new SUV models – the all-new Santa Fe and Kona – while a recent sales rebound in the Chinese market also largely contributed to the growth.

Sales in overseas markets totaled 327,409 units, representing an increase of 12.2 per cent year-over-year. Sales increased significantly as the company’s popular subcompact SUV Kona expanded to key markets and demand remained strong in emerging markets such as Brazil, Russia and India.

Sales in the Korean market increased by 5.7 per cent compared to the same period of the previous year, recording 63,788 units sold. The all-new Santa Fe became the best-selling model in Korea for the second consecutive month, posting 11,837 units sold.

Hyundai Motor plans to maximize profitability by continuing its SUV sales momentum globally.

Monthly sales figures provided in this press release are unaudited and on a preliminary basis.

Hyundai Motor currently has overseas plants in Brazil, China, the Czech Republic, India, Russia, Turkey and the U.S.

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AutoBeat / Auto Trends

Volkswagen forecasts Nigeria automobile market rebound

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Volkswagen AG expects a rebound in vehicle sales in Nigeria as the economy recovers, the head of the company’s South African operations said.

Sales in the West African nation dropped to less than 40 units last year, according to the company. Nigeria was one of several African oil exporters hit hard when crude prices crashed in 2014, but the economy is recovering as oil rebounds.

“Now that the oil price has been recovering hopefully this situation will reverse and we can assemble and see a few hundred cars in the next year or so,” Thomas Schaefer said in an interview at a conference in the Rwandan capital, Kigali.

Volkswagen resumed building cars in Nigeria in 2015, it’s first factory on the continent outside South Africa. The company is set to start producing models including the Polo, Passat and Teramont at an assembly plant in Rwanda next month.

We are “expecting to start with at least 2,000 cars in 2018 alone, but I would love to get to 10,000 cars,” Schaefer said.

While VW is continuously assessing opportunities in countries like Ethiopia, Ghana and Tanzania for expansion, “with these new markets it is a bit of a long shot,” he said.

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