The impact of autonomous vehicle technologies on product recall risk

Complex Advanced Driving Assistance Systems (ADAS) and Autonomous Vehicle (AV) technology are increasing the number of vehicle recalls. At the same time, financial risks resulting from extensive product recall events can severely affect vehicle manufacturers and their suppliers, exposing the automotive supply chain to business continuity, legal and reputational risk. However, these risk implications are under-appreciated by large segments of the supply chain. This study shows that product recall events are increasing in general but recall events associated with ADAS/AV technology form an increasingly large percentage of these recall events. Based on this analysis, we describe ADAS/AV-specific aspects of risk mitigation and present a multidimensional approach, combining production-centric risk mitigation avenues in the automotive supply chain with the transfer of residual financial risks via insurance. We find that this comprehensive risk mitigation approach benefits in higher transparency of total production costs and increased resilience of the automotive supply chain. Against the background of an increasing product recall risk resulting from the increasing automation and interconnectedness of modern vehicles, we therefore suggest a closer, more strategic cooperation between insurance companies, car manufacturers and automotive suppliers for the benefit of all parties.

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