Auto Focus

The Wrong Side of History

You’re either for the practice of allowing the selling of used vehicles with open recalls or against it.

On Sept. 7, 2014, Jewel Brangman was driving a 2001 Honda Civic in Los Angeles when she suffered a minor accident that deployed the airbag, sending a shard of shrapnel into her neck that ultimately killed her.

On Jan. 18, 2015, Carlos Solis was driving a 2002 Honda Accord in Houston when he suffered a minor accident that deployed the airbag, sending a shard of shrapnel into his neck that caused him to bleed to death.

Both were victims of faulty Takata airbags that had been under a recall issued in 2011.

Brangman rented her vehicle from Sunset Car Rental, an independent car rental company in San Diego. Solis bought his vehicle from All Stars Auto Sales, an independent dealership north of Houston. At the time Brangman rented that vehicle and Solis purchased his, the defective parts had not been repaired on either vehicle.

On Dec. 4, 2015, the Raechel and Jacqueline Houck Safe Rental Car Act was signed into law as part of the massive transportation bill. This legislation makes it a violation of federal law for car rental companies with fleets of more than 35 units to rent, loan or sell cars under open recall. Meanwhile, there is no similar federal prohibition against auto dealers from selling used vehicles with open safety recalls.

Associations representing auto dealers — National Automobile Dealers Association (NADA) and National Independent Automobile Dealers Association (NIADA) — were against the recall bill, as its language pertained to dealerships’ loaner fleets. The dealer associations pushed for, and got, an exemption from the law for car rental companies and auto dealerships with rental (or loaner) fleets of fewer than 35 vehicles.  

The associations’ opposition was also driven by the fear that a rental car recall law would be a slippery slope to legislation that would forbid used car dealers from selling vehicles with open recalls. They are right, this is a slippery slope. This legislation will come. It may not be soon, and it may take years to become law, but it will come. And ultimately, those opposed to this legislation will be on the wrong side of history.

The argument from the dealer associations is that preventing the sale of used vehicles with unrepaired recalls would be an undue burden on its dealers, a burden exacerbated by those recalls that seemingly do not relate to the safe operation of the vehicle (the “mislabeled sticker defense”).

Let’s make no mistake: it is a burden, for car rental companies and dealers alike, including AutoNation, the country’s largest dealer group. Yet knowing full well this burden, AutoNation has taken the lead and voluntarily agreed to stop selling used vehicles under open recall.

The number of recalls and units affected has spiked and does not look to decline in the near future. Some replacement parts don’t become available for months. Cars that sit on dealers’— and car rental companies’ — lots are stealing income.

But that’s fleet management, something the public will never understand. However, the public, along with safety groups and “gotcha” journalists, do understand “increasing the risk of a crash.”

In this same argument, the theory is floated that recalls should be delineated by severity, allowing the most important recalls to be dealt with more urgently.

There is no political will to ground recalls by severity. The idea has been floated for years, but it has not gained traction. No lawyer or legislator, nor NHTSA, is willing to be responsible for playing God by judging severity, specifically when a crash due to a recall identified as “non-serious” goes unrepaired and takes a life.

And those recalls of the mislabeled sticker type — in reality — are minuscule in number and units affected compared to those characterized by a rational person as “in need of urgent repair.” (Check out our research for the data.)

With a change unlikely in how recalls are defined, it’s all or nothing. You’re either for the practice of allowing the selling of used vehicles with open recalls or against it.

U.S. Rep. Roger Williams, an auto dealer, introduced an amendment to the recall bill that would have excluded auto dealers’ loaner and rental fleets. During the House floor debate on the bill, Williams said, “There is none of us in our business that would ever put any of our owners in an unsafe car.”

Of course, no dealer wants to endanger human life. But All Stars Auto Sales did just that. No car rental company wants to endanger human life either, but Sunset Car Rental did just that. In the real world, stuff happens that gets in the way of our theoretical ideal of safety. People roll the dice, knowingly or unknowingly. It’s human nature.

You could say that the rental recall law — and major rental companies’ ultimate support of it — wouldn’t have happened without another accident, the one that took the lives of Rachael and Jacqueline Houck in California in 2004 when they crashed a rented PT Cruiser under recall for a power steering leak. That may be true, but then, it’s tragedies like these that become the catalyst for change.

On Dec. 23, 2015, NHTSA announced another death linked to a faulty Takata airbag in a 2001 Honda Accord, a used car with a recall that went unrepaired. Let’s hope the legislation to ground the sale of used vehicles with unrepaired recalls is not named for anyone who died.

Comments

  1. Tom Prunty [ December 30, 2015 @ 12:49PM ]

    Entirely limiting sales of vehicles with recalls isn't practical or necessary. The notion that "that’s fleet management, something the public will never understand" makes the dealer's needs irrelevant. Consumers can be educated. Everyone's needs in the situation should be considered, obviously with safety being the number one priority. Surely we are capable of finding a happy medium and still keep everyone safe.

    Presently I can sell a car in any condition through wholesale auctions, even a car with accident damage or needing an engine. Given the new recall law, I would be restricted from doing that. There are buyers looking for those types of vehicles because they have the skills, finances, or other resources to fix the vehicle and get it back on the road. Are we to take away that opportunity for the buyer? This selling technique is used to sell cars that might not be financially prudent for the seller to repair, but offers the buyer the opportunity to make repairs either for safety, cosmetic or drive ability considerations. It works for both parties. Without this opportunity, the owner would be forced to keep the vehicle in stock until repaired, depleting his fleet of potential revenue, possibly on a large scale, depending on the number of vehicles impacted in his fleet. The owner also suffers the ancillary burdens of paying financing charges and suffering depreciation

    It appears that manufactures still hold no culpability for faulty manufacturing. Some recalls have taken over a year to complete. Rental car companies should not be suffering the entire burden of the impact.

  2. Rosemary Shahan [ December 30, 2015 @ 04:09PM ]

    Thank you for the thoughtful analysis. You're right -- it's just a matter of time, and how many innocent lives are lost, before the dealers' reckless practices are made a violation of federal law. It's already illegal under a number of state laws for dealers to knowingly, deliberately sell unsafe products. Particularly when they advertise that their products have passed a "rigorous 125-point inspection."

    AutoNation is smart to ensure their cars are recall-free before they leave the lot. They're the trendsetters. History will show they were right -- and very wise.

  3. Sharky Laguana [ January 4, 2016 @ 06:06PM ]

    @Tom Prunty, I believe you are mistaken: there is no restriction in the law on selling salvage or junk vehicles (i.e. "missing an engine"). In fact there is a specific exclusion for that! There is also no restriction on selling vehicles with mechanical defects. The requirement is on operational vehicles which have uncompleted safety recalls. If the vehicle is operational than you need to get any open recalls completed. Since its a recall you don't even have to pay for it. That is not the same as repairing everything wrong with the vehicle. Two very different things.
    We have a lot of vehicles to sell too, but I am 100% behind this law. First and foremost I would never want anyone to be hurt or killed in one of our vehicles due to an open recall. Second of all if the law was not passed at the federal level it was inevitable that every state would pass its own law, which would be a huge problem for operators with vehicles in multiple states.

  4. Noah Lehmann-Haupt [ January 5, 2016 @ 11:16AM ]

    This makes a lot of sense, and a law should be passed to require all open recalls to be completed before a car is rented, sold (or driven, really, but that's going to be hard to enforce.) This should, however, assume a few things:

    1. We need to be sure that recalls aren't done superfluously. A recall should only be issued if it's a REAL and legitimate safety threat, not just an "improvement." If the latter happens, then we should consider something more than a binary "recall/no-recall" system -- there should be grades -- just like in software -- "feature improvement" vs "bug fix" vs "critical safety issue". Only the lattermost type of recall should prevent a car from being driven or sold.

    2. There needs to be a viable mechanism for notifying vehicle owners / dealers / rental companies about open recalls. The current process -- in which letters are (maybe) sent to (maybe) the current owner/driver -- is an imperfect system at best. Worse is having to call the dealers and request a status update on any vehicles.

    A very simple system can and should be put in place -- create a simple web-based database in which dealers / owners / rental companies can register a VIN and an email address, and the instant a recall is issued, the appropriate parties can be notified. This type of system can be built in a weekend and won't cost a lot of money if done right.

    If those requirements can be met, then no "undue burden" will be on anyone's shoulders and everyone wins.

  5. Jason Manelli [ January 27, 2016 @ 10:24AM ]

    History will judge us all deficient on this issue because we allowed our industry to be sacrificed on the alter of public safety while ignoring the impact of a deeply flawed recall system on our industry and the public.

    As it currently exists, the Rental car safety act singles out a minuscule number of vehicles from our nations overall fleet in an ineffectual, symbolic gesture toward promoting the illusion of safety while ignoring the vast majority of un-repaired recalled vehicles driven and sold every day by the general public, sold at new and used dealers and whole sale auctions.

    As an industry we are at a critical juncture and need to fix the broken recall system if we are to truly accomplish the goal of improving public safety.

    Within our car rental company, we began voluntarily complying with the provisions of this law several years ago.

    We have documented a error rates as high as 90% and routinely 70-80% on manufacturer recall notifications, and in the last 12 months we have parked 45 Ford Fiestas and Fusions for open recalls requiring unavailable parts, only to be told 8 months later by Ford, once parts were available, that our units did not require the service.

    We need to advocate for common sense, doable reforms to fix the recall system.

    Recall notifications should be reliably delivered.

    Manufacturers should have a greater responsibility to carry out recall services efficiently.

    Parts manufactures should be held accountable for delivering adequate replacement parts.

    Parts and vehicle manufacturers must pay our industry loss of use for rental units grounded due to their defective products.

    If we work together as an industry we can all be on the right side of history by being the catalyst for fixing our nation's broken recall system.

    - Jason Manelli

Comment On This Story

Name:  
Email:  
Comment: (Max. 10000 characters)  
Please leave blank:
* Please note that every comment is moderated.

Author Bio

Chris Brown

Executive Editor

Chris is the executive editor of Business Fleet Magazine and Auto Rental News. He covers all aspects of the fleet world.

Newsletter: Sign up to receive latest news, articles, and much more.

Read the latest

Auto Focus Blog: A blog covering fleets, auto rental and the business of cars

Why Do We Visit Capitol Hill?

Members of the American Car Rental Association met with U.S. senators, representatives, and their aides last week. Here’s why bringing the message to this forum matters.

The Customer Isn’t Always Right

Not caving to a customer with a blatant agenda may have consequences, especially for a small rental company that relies on stellar Yelp ratings to advertise. But business integrity must prevail.

The Truth Behind Compact Van Depreciation

Why are large van values holding up better than their compact counterparts, and will it last?

Job Finder: Access Top Talent. Fill Key Positions.