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Blumenthal, Nelson Press Used Car Dealers on Vehicle Recall Repairs

(Washington, DC) – In a renewed push to protect consumers from potentially unsafe recalled vehicles, two leading Democrats on the Senate Commerce Committee want to know why some car dealers are standing in the way of efforts to require recalled used vehicles to be fixed before they’re sold to the public. 

In letters send today to the National Automobile Dealers Association (NADA) and the National Independent Automobile Dealers Association (NIADA), U.S. Senator Richard Blumenthal (D-CT) and U.S Senator Bill Nelson (D-FL) questioned whether dealers are placing economic concerns ahead of customers’ safety.

“We remain very concerned that used car purchasers will be the only category of vehicle consumers unprotected against potentially dangerous recalled vehicles,” wrote Blumenthal and Nelson.

Their action comes in the wake of a recent announcement by the nation’s largest car retailer, AutoNation, that it would no longer sell or lease used vehicles under recall until they were remedied.  Following that announcement, the NADA and NIADA voiced opposition to the company’s new policy and efforts in Washington to require used call dealers to repair recalled vehicles.   

Current federal law prohibits the sale of new cars under recall until they are repaired but does not require the same of used cars.   In response, Blumenthal introduced a measure, S.900, earlier this year prohibiting dealers from selling unrepaired recalled used cars.  The provision was also included in comprehensive auto safety legislation, S.1743, introduced by Nelson that, among other things, included increased criminal and civil penalties for automakers caught covering up dangerous defects.  An amendment to include the broader auto safety measure in the Commerce Committee’s markup of highway bill failed in July.  Both lawmakers have vowed to continue efforts to get the used car provision included in the pending highway bill.

Below is the text of the lawmakers’ letter.

Dear Mr. Welch:

We are writing to assess the National Automobile Dealers Association’s (NADA’s) current position regarding the repair of recalled used vehicles before sale to consumers.

This past July, the Senate passed a six-year surface transportation reauthorization bill, which included motor vehicle safety provisions reported by the Senate Committee on Commerce, Science, and Transportation. Current law already prohibits the sale of new cars under recall until they are remedied. To further protect consumers, the Senate-passed bill also included a prohibition against rental car companies and dealers from renting out recalled vehicles until they are remedied – a prohibition that the rental car industry strongly supported. However, as the Ranking Member of the full Committee and the Ranking Member of the Subcommittee on Consumer Protection, Product Safety, Insurance, and Data Security, we remain very concerned that used car purchasers will be the only category of vehicle consumers unprotected against potentially dangerous recalled vehicles.

In September, the nation’s largest automobile retailer, AutoNation, announced that all of its franchises would no longer sell, lease, or wholesale used vehicles under recall until they are remedied. According to press accounts, NADA does not support AutoNation’s policy. In light of this development, we ask that NADA respond to the following questions:

1.         In a September 8, 2015, statement, AutoNation says its new policy acknowledges the reality that consumers cannot be expected to know of every recall on every vehicle they consider purchasing.  As such, the company says retailers should have the responsibility to identify and remove recalled cars from the market until safety issued are addressed, because safety must take priority over purely economic considerations.  Does NADA agree with this assessment? Or does NADA disagree that retailers bear responsibility and that ensuring customers’ safety should take precedence over economic concerns?

2.         NADA has maintained that requiring dealers to fix used cars before sale would depress the value of customers’ trade-in vehicles. However, under its new policy, AutoNation said its franchises would accept trade-in vehicles under recall and value them based on standard guidelines. How does NADA reconcile AutoNation’s new policy regarding trade-in vehicles with your position that remedying used cars under recall before sale would “make it more difficult or impossible for consumers to trade-in their cars”?

3.         According to media reports, AutoNation is willing to share with any dealership its automation technology – at no cost and once fully developed – that will implement its new policy on used cars.  Will NADA encourage its members to adopt and implement such free technological solutions so that more dealers will fix defects in used cars before sale?

4.         Understanding that many dealers that sell used vehicles lack the size and resources as some of the largest dealership groups, please detail specific accommodations that would allow NADA’s membership to stop selling used cars under recall until they are remedied.

As Congress considers the highway bill, we will continue to push for legislation that would protect used car buyers from potentially unsafe recalled vehicles. As NADA is well aware, almost four times as many used vehicles are sold each year than new vehicles in the United States. We hope that NADA and its members will be constructive partners in ensuring the safety of consumers, and we look forward to receiving your response to this inquiry by October 15, 2015.