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Semiconductor shortage poses recall risk for carmakers

Global semiconductor shortages could impact product recalls in Europe’s automotive sector for years to come, says Sedgwick in its Q2 report tracking product recalls.

Longer-term risks are as significant for Europe’s automotive sector as the immediate operational risks caused by the shortages, Sedgwick adds in the Q2 2021 Recall Index.

“In the months and years to come, automakers may see increased recall-related risks linking back to the global semiconductor shortage,” Sedgwick says, adding that quality tends to slip when component manufacturers are under pressure to increase production and companies seek alternative suppliers.

“Since the chips are used in a wide variety of electronics systems, the ways a product recall could play out are numerous,” it states.

Automotive businesses recorded a 16% rise in recalls in Q2, compared to Q1 2021, totalling 176 compared with 133 in the last pre-pandemic quarter in Q1 2020. Germany recorded 73% of all recalls in the second quarter this year, with injuries recorded as the leading risk associated with recalls in the automotive sector.

Sedgwick says the automotive sector also faces risks from political and economic pressures to switch to electric vehicles. Last month, the EU proposed a ban on the sale of new petrol and diesel cars from 2035, as manufacturers gear up investments in the transition to electric vehicles. Sedgwick says that could raise new safety risks, particularly around the safety of batteries as alternative power.

Europe’s product recalls largely returned to pre-pandemic levels in Q2 2021 across most sectors, Sedgwick says, with supply chains still disrupted by the impact of Covid-19 and Brexit.

The food and pharmaceuticals sectors both reported recalls at levels more on par with pre-pandemic trends.

The food sector recorded 1,120 recalls in the second quarter 2021, up almost 8% on Q1 2021, and although down on 1,448 recalls in Q4 2020, Sedgwick says food recalls could reach a three-year high if they continue to climb at the current rate.

Pharmaceuticals recorded an 8.2% rise in recalls to 106 in the second quarter of 2021, led by safety reasons for recall. France, meanwhile, registered the highest number of recalls in Europe.

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