Seven Democratic lawmakers are trying again to push legislation that would prohibit the retailing of vehicles with an unfulfilled recall; a plan prompting the two largest dealership associations to reiterate their objections and explain the potential unintended consequences.
Amid all the hubbub over healthcare and the revolving door at the White House, late last week a proposal dubbed the Used Car Safety Recall Repair Act surfaced on Capitol Hill as lawmakers leveraged reports over another potential fatality involving faulty Takata airbags. While both the National Automobile Dealers Association and the National Independent Automotive Dealers Association want to retail safe vehicles, the groups fear this measure would hamstring dealers and impact owners significantly.
“NIADA shares the goal of 100 percent recall completion rates and supports public policies designed to achieve that goal. However, overbroad legislation prohibiting dealers from selling any used motor vehicle with any open recall does not move us toward that goal,” NIADA senior vice president of legal and government affairs Shaun Petersen wrote in a message to Auto Remarketing.
“This legislation treats all recalls the same — whether safety related or not — and does nothing to manufacture the parts necessary to repair recalled vehicles or entice owners to take a recalled vehicle to a franchise dealership for repair,” Petersen continued. “But most important, it harms consumers by diminishing the trade-in value of their recalled vehicles by an average of $1,210 — and often upward of $5,000 — and would likely force dealerships to not take those vehicles in trade at all.
“Requiring dealers to ground vehicles for any recall does not justify that economic loss, particularly when the National Highway Traffic Safety Administration admits not every vehicle with an open recall needs to be grounded immediately,” he went on to say. “NIADA stands ready and willing to work with members of Congress to find common-sense solutions to improve recall completion rates. However, this legislation — which was rejected numerous times by the previous Congress — is not the answer.”
Led by Sen. Richard Blumenthal of Connecticut and Sen. Edward Markey of Massachusetts along with Rep. Jan Schakowsky of Illinois, supporters of the Used Car Safety Recall Repair Act fear any owner of vehicle under recall will suffer the same tragic fate as the dozen individuals fatally wounded by faulty Takata airbags.
“This commonsense bill will protect used car buyers from driving a ticking time bomb off the lot and onto our roads,” Blumenthal said.
Schakowsky added, “It’s already illegal to sell a new car or offer for rent a car under recall. Our bill will give used car buyers the simple assurance that known defects have been fixed before you drive the car off the lot.”
NADA spokesman Jared Allen confirmed many of the points Petersen raised, including how much trade-in values can suffer.
“When recalled vehicles awaiting repair parts — including vehicles that the engineering experts at the NHTSA and the automakers have determined are acceptable for consumers to drive — can't be sold, the market instantly devalues those vehicles, resulting in a massive trade-in tax of, on average, $1,210 per vehicle, according to J.D. Power,” Allen said in a message to Auto Remarketing.
“We’re not in favor of anything that would create a trade-in tax because it’s unfair to ask consumers to pay for a manufacturer’s mistake,” Allen went on to say. “Additionally, imposing a $1,210 trade-in tax could lead to fewer, not more, recalled vehicles getting repaired, and we don’t believe a reduction in the recall completion rate is a good policy outcome for consumers or anyone else.”
The legislation introduced in the House is also co-sponsored by Rep. Frank Pallone Jr. of New Jersey, Rep. Bobby Rush of Illinois, Rep. G.K. Butterfield of North Carolina and Rep. Doris Matsui of California.