The last thing an auto company wants to do in a recession is issue a recall, but that’s exactly what Toyota was forced to do from 2009 to 2010, when certain Toyota and Lexus models had a defective piece of technology in the brakes.   Robert Hammond, an economics professor, will publish a new research project on the recalls that followed the discovery of the brake defects, revealing an interesting aspect of American consumers. Although the Toyota and Lexus recalls were widely publicized and even played a part in the death of a California State Highway Patrolman, the recalls did not have a significant impact on the sales of Toyota and Lexus models in the secondary market.   Hammond discovered the relationship between demand and recalls shortly after finishing another project about Chrysler.   “The project on Toyota followed a project looking at Chrysler during the late 1970s ,” Hammond said. “The Chrysler project was based around trying to find the effect on consumer demand of bailouts and once that project was completed, Toyota recalls were in the news and it seemed logical to apply the same methodology to the Toyota recalls incident, so I got involved with that project just as the recalls were beginning which was the fall of 2009.”   Although the defective brake technology was not restricted to any one particular model, Hammond found that in the end, consumers didn’t care about recalled models or a tainted brand.   “It was easy to look at the data in two ways,” Hammond said. “One was to compare recalled Toyotas to unrecalled Toyotas. The other was to compare recalled Toyotas and unrecalled Toyotas together to other vehicles.”   According to Hammond, the first considers if consumers dislike recalled vehicles. The second looks at whether consumers dislike vehicles that come from a company that has recall and safety problems.   “You can look at it both ways and it turns out that you won’t find a [significant negative] effect no matter what way you look at it,” Hammond said.   What allowed Toyota to be so successful despite all of the recalls?   Hammond looked at a wave of Audi recalls in 1986 that shared many similarities with the latest Toyota recalls. In 1986, several Audi models were recalled due to brake problems. The effect of the defect was the same. The media was similarly harsh. Both Toyota and Audi’s responses were similar. However, Audi suffered a drastic decrease in demand. What was the difference?   “You have Toyota in 2009 and 2010 that didn’t have a large effect [from recalls] and you have Audi in 1986 that did,” Hammond said. “There is suggestive evidence that the main difference, not conclusive evidence, but suggestive evidence that the main difference between the two companies was that Toyota was a much larger fraction of the U.S. market in 2009…The difference is that everybody knew what Toyota was and what they made. Very few people had an idea of what Audi was in 1986.”   According to Hammond, by the time Toyota had to face recalls, they had already built up a reputation strong enough to weather the negativity that would follow.   “You can certainly argue that once companies reach a certain status in the industry, then safety problems are less damaging to them,” Hammond said. “That’s certainly an implication of the findings there’s probably evidence that some companies do [understand that they can afford to face safety problems]. There is a fat cat mentality.”   Although this may be true, hopefully no company is explicitly making inferior products knowing they can weather the negative publicity. Hammond said he’s not worried.   “I learned that there are a lot of recalls every year, every month, every day,” Hammond said. “Lots of models are recalled and the ones that make it into the media are just a fraction of the whole, so I would be less swayed by very highly-publicized recalls.”   Jackie Tsai, a junior in psychology and Toyota owner, isn’t too worried either.   “I think stuff like recalls happen; mistakes happen,” Tsai said. “My car is still functioning fine to me. Warranties and service are also important.”   Hammond’s research on vehicle recalls may not be a common research topic among undergraduates, but according to him, the project caught his attention because of a previous methodology he used in the Chrysler research.   Finding himself equipped with the experience from his last project, Hammond is confident to look at a contemporary problem from a refined perspective.