DETROIT (Sept. 19, 2000)— Auto makers and suppliers are wary of a federal bill that would require them to provide much more confidential product warranty data.
The industry keeps a tight lid on warranty information, fearing the data could paste a poor-quality label on vehicles and parts.
"We could add billions of dollars of costs to the industry," said Neil De Koker, managing director of the Original Equipment Suppliers Association in Troy, Mich. "It could result in more recalls that may not, under normal conditions, be warranted. And recalls are extremely costly."
Secretary of Transportation Rodney Slater made his proposal in reaction to the Firestone tire recall. Signs are growing that the recall might lead to a significant change in how the federal government regulates automotive safety.
The National Highway Traffic Safety Administration, which reports to Slater, proposes casting a broad net, requiring auto makers to hand over any reports of actual or potential product defects.
However, it is not clear how much political will to change safety laws exists in Washington.
Congress is racing to adjourn by Oct. 6 and still must pass essential spending bills to keep the government running. In addition, Republicans will be loath to give regulators any more authority.
The auto makers´ public reaction is guarded.
"We are assessing whether the proposed measures achieve the goal of obtaining safety recalls faster and overall protecting consumers," said Gloria Bergquist, spokeswoman for the Alliance of Automobile Manufacturers.
The industry´s reaction also is cautious because NHTSA has not spelled out details of its proposal. The proposal would require auto makers to report warranty claims, potential defects, personal injury lawsuits and all defect and recall communications sent to dealers.
Currently, auto makers do not file warranty information automatically to NHTSA. The agency may ask for warranty data after opening an investigation.
But the agency has not outlined what it will do with the massive amounts of information it suggests collecting, in particular whether it will make the data public.
NHTSA will overdose on that much data, said one former automotive executive who declined to be identified.
"It would be devastating to NHTSA," the former executive said. "They could not handle the data.
They wouldn´t know what to make of it. NHTSA would not be able to refine the data. The volume of warranty data coming into an auto company is absolutely enormous.
"Take the 25,000 dealers in the United States and multiply that by thousands and thousands of warranty claims," the former executive said.
Nor is warranty information the best indicator of failure in the field, the former executive said. It can take up to six months for warranty information to be filed by a local dealership, consolidated at the district and regional levels and finally pooled at a central corporate clearinghouse, the former executive said. Nor is the dealer diagnosis always accurate.
"It is very unreliable," the former executive said, adding that examining failure data in a statistically controlled sample is more effective.
NHTSA has not spelled out whether collected warranty data will be public or remain confidential.
"In general, the information the government receives is public information unless there is a claim of confidentiality made for it or unless it is covered by the privacy act," said NHTSA spokesman Tim Hurd.
Auto makers likely will fight the public disclosure of historically secret information.
"Holding trade secrets is a vital part of the market system," the former auto executive said. "It will be challengeable up to the Supreme Court. It isn´t going to happen without a terrific battle on the legal front."
Ed McNeal, director of government relations for supplier Dana Corp., said: "If Secretary Slater´s proposal is passed into law, it would be regrettable because of the additional time and costs that manufacturers will incur with the additional reporting requirements. In the end, extra costs are likely to be passed on to the consumer.
"Obviously we would like to avoid all the paper, but if that's what the law says, we´re going to comply with the law."
The NHTSA proposal is one of three bills arising from the Firestone tire recall. Firestone is recalling 6.5 million tires linked to 88 deaths.
Last week, Rep. Fred Upton, R-Mich., sponsored a bill that would increase NHTSA´s authority to collect data on possibly defective tires. This week, Senate Commerce Committee Chairman John McCain, R-Ariz., plans to have his panel act on legislation that also would give NHTSA more power to collect safety information.
The various proposals would broaden NHTSA´s authority. For example, proposals include compelling auto makers to report safety recalls that occur in other countries, requiring submission of claims data from insurance companies and increasing fines for withholding safety information.
Ms. Connelly is a reporter for Automotive News, a sister publication of Tire Business.