Carmakers Throw Up Roadblock to Prevent Rental of Defective Vehicles

Sen. McCaskill’s Subcomittee on Consumer Protection Holds Hearing

St. Louis Post-Dispatch, May 21, 2013

WASHINGTON • After working for two years to get rental car companies on board, safety advocates encountered a new obstacle today to legislation banning rental of recalled vehicles: opposition from car manufacturers.

With representatives of Clayton-based Enterprise Holdings looking on, the CEO of the Alliance of Automobile Manufacturers testified in a Senate hearing that major American and foreign car companies won’t back a bill as written requiring rental companies to fix defective cars and trucks before putting them on the road.

Mitch Bainwol, representing companies accounting for three-fourths of vehicles sales in the United States, said he worries about carmakers’ liability.

“Once you federalize a voluntary agreement, you’ve introduced absolutely a loss-of-use liability,” Bainwol said, describing his objection to the legislation.

In other words, carmakers worry that rental companies will sue them if defects render vehicles impossible to rent.

Similarly, the president of the National Automobile Dealers Association said his organization opposes the legislation as written, arguing that it would “create friction between large rental companies, auto manufacturers, franchised new car dealers and members of the public who own recalled vehicles.”

Bailey Wood, spokesman for the automobile dealers, said later: “We do not want to stop this legislation. We think a few tweaks can be made.”

They were testifying at a hearing of the Senate Subcommittee on Consumer Protection, chaired by Sen. Claire McCaskill, D-Mo.

The hearing grew heated when Bainwol refused to answer yes or no when asked if he believed rental car companies should fix defective vehicles before leasing them.

Sen. Barbara Boxer, D-Calif., a sponsor of the legislation, called Bainwol’s comments “shameful” and remarked: “I don’t know what planet you’re living on.”

McCaskill, a co-sponsor, said to Bainwol: “I think you’re on the losing side of a very bad PR situation if you’re not careful.”

McCaskill said later she was optimistic that agreement with the automotive industry could be reached.

The legislation in question is the product of a protracted negotiation and is supported by Enterprise, the industry leader, and all of the major rental car companies. McCaskill and Sen. Roy Blunt, R-Mo., have worked to fashion the compromise.

The proposed law grew from the death nine years ago of two sisters in California driving an Enterprise rental car that had gone unrepaired despite a defective power steering hose.

It was the first opportunity for Carol Houck to testify in Congress about the death of her, daughters Raechel and Jacqueline, ages 24 and 20, in the recalled PT Cruiser.

“I received the phone call dreaded by every parent: My daughters had been involved in a terrible traffic collision that took both of their lives in a fiery crash with an 18-wheeler,” she said.

A campaign by Houck and consumer groups led to pressure on industry leader Enterprise last year to drop objections to the bill. In two days time, more than 160,000 people signed an online petition requesting Enterprise to relent, which the company eventually did after changes in the legislation.

The bill requires rental car companies to ground most defective vehicles within 24 hours after receiving notice of safety recalls. In cases of minor defects, companies are permitted to rent vehicles with interim fixes that eliminate safety risks until parts can be secured.

David Strickland, administrator of the National Highway Traffic Safety Administration, offered his support in testimony. He said the efforts of Carol Houck after the death of her daughters “served to highlight a very serious gap in federal law.”

Regarding carmakers worry of litigation, Houck asked afterward: “You may get sued, but you may save somebody’s life. Have you thought about it that way?”

#thegov_button_66547ae354d3d { color: rgba(255,255,255,1); }#thegov_button_66547ae354d3d:hover { color: rgba(49,49,49, 1); }#thegov_button_66547ae354d3d { border-color: rgba(204,0,0,1); background-color: rgba(202,44,40,1); }#thegov_button_66547ae354d3d:hover { border-color: rgba(49,49,49, 1); background-color: rgba(255,255,255,1); }