Category: Other Consumer Issues

Car Dealers Want Out of Legislation Banning Renting Recalled Cars

USA Today, January 16, 2013

Car dealers and small rental-car companies want to be able to sell, lend or rent cars that have been recalled for a variety of defects — before they’re fixed. And they’re working behind the scenes on Capitol Hill to make sure they can.

Major rental-car companies agreed last year not to do that. But lawmakers, concerned about vehicle safety, want everyone on board. Legislation to block all rental-car companies from loaning out recalled vehicles before repairs are made will be reintroduced soon in the new Congress, says Sen. Richard Blumenthal, D-Conn., a co-sponsor of the legislation.

Accidents, injuries and deaths have been attributed to rental cars with defects that were subject to recalls but that had not been repaired.

As proposed in the final days of the last Congress, the bill also covered used car dealers, smaller rental-car companies and the loaner and rental cars offered by new-car dealers. Existing law only requires that recall fixes be made to new cars before they’re sold.

“The agency believes that all vehicles under recall should be promptly repaired — regardless of whether they are new, used, leased, or rented,” National Highway Traffic Safety Administration chief David Strickland said in a statement this week.

The General Accounting Office urged NHTSA to seek authority to require used car dealers — who sold 11 million vehicles in 2009 — to make recall repairs to vehicles before selling them. NHTSA says there are about 600 vehicle recalls a year, affecting about 20 million vehicles.

“Many consumers may be unknowingly putting their lives at risk by purchasing a defective vehicle,” the GAO said in a June 2011 report.

Exempting car dealers would confuse consumers who have a right to know that a vehicle “is free from defects and safe to drive,” says Blumenthal.

Dealers have a financial incentive to fix recalled cars quickly because manufacturers are paying for the work, says Bailey Wood, spokesman for the National Automobile Dealers Association. But he adds that many recalls are minor and might not justify taking vehicles out of service.

“Not all recalls are the same,” says Wood. “It could be a windshield wiper problem in Death Valley.”

Used car dealers who aren’t affiliated with a franchised new-car dealer, however, say there must be a better system for notifying them of recalls, which sometimes only affect certain vehicle identification numbers within a model year.

“Philosophically, we don’t have a problem fixing a vehicle that has an open recall notice — as long as we know about it,” says Steve Jordan, chief operating officer of the National Independent Automobile Dealers Association.

Rent-A-Wreck owner Jack Fitzgerald says that requiring smaller rental car companies to fix recalled cars before renting them could put them out of business. He says they get parts later than the bigger companies.

But consumer advocates say legislation is need. The bill, known as the Raechel and Jacqueline Houck Safe Rental Car Act, is named for sisters from Santa Cruz, Calif., who were killed when their rental car caught fire and crashed into a truck. The defect was the subject of a recall, but the car had not been repaired.

In 2008, Gary Masi of Greenwich, Conn., was permanently disabled in a 2008 Lexus ES 350 loaner car that had been recalled for an unsecured floor mat but not repaired. He hit a tractor trailer on the highway while the car was careening out of control, according to a statement prepared for a congressional hearing.

Consumer advocate Rosemary Shahan, who pressed for the legislation, believes there are more victims but says many injuries and deaths don’t become public because rental car companies and dealers aren’t required to report them to NHTSA and always insist that victims sign confidentiality agreements.

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