Ryan Beene, Crain News Service
WASHINGTON (Feb. 8, 2016) — The powerful auto dealer lobby won a key legislative battle in December when a ban on selling used vehicles with open safety recalls was left out of the highway bill President Barack Obama signed into law.
But now the lobby and its allies face a guerrilla war against government and industry insurgents working to close off what consumer and safety advocates say is a dangerous loophole. That war is flaring on several fronts:
- The Federal Trade Commission (FTC) last month used its authority over dealer advertising to signal its intent to take up recalls as a consumer-protection issue.
- Fiat Chrysler Automobiles (FCA) is drafting a policy, as required by regulators under a consent decree, to deter dealership sales of used vehicles with unfixed recalls.
- American Honda Motor Co. is reminding dealers of their possible legal liability if they sell new or used cars with unfixed safety recalls in violation of stop-sale orders.
- AutoNation Inc., the largest U.S. dealership group, is committing to repair all recalled vehicles prior to sale, pitting it against the National Automobile Dealers Association.
Taken together, the moves make clear that while the proposed federal law to close the used-car loophole is dead for now, efforts to keep unrepaired recalled vehicles out of circulation are stirring. And with powerful players mobilizing on the issue in an era of high-volume, high-profile recalls, dealers and auto makers may face pressure to revisit their policies.
The National Highway Traffic Safety Administration (NHTSA) said it's not done fighting for an end to the sale of any vehicle — new or used — with an unfixed safety recall.
It's “the right thing to do,” agency spokesman Gordon Trowbridge said.
“We're happy to see any steps to help protect consumers and prevent the sale of vehicles under recall,” he said.
The highway law enacted in December contains provisions that bar rental agencies from lending vehicles with open recalls, but the National Automobile Dealers Association's (NADA) influence on Capitol Hill helped kill an amendment by Sen. Richard Blumenthal, D-Conn., that would have extended the ban to used-vehicle sales.
NADA spokesman Jared Allen said while the group supports the goal of fixing 100 percent of recalled vehicles, policies such as Blumenthal's amendment are “overly broad” and “counterproductive.”
The Blumenthal amendment and similar proposals fail to distinguish between “minor” issues and legitimate safety concerns and would needlessly ground millions of used vehicles, driving down trade-in prices, Mr. Allen said, referencing an NADA-commissioned study by J.D. Power and Associates.