U.S. wants dealers to do more to fix recalled vehicles

David Shepardson
Detroit News Washington Bureau

New York — The head of the National Highway Traffic Safety Administration wants the nation’s automakers and more than 17,000 new car dealers to do more to ensure unsafe vehicles are repaired.

In a speech Friday at the World Traffic Safety Symposium, NHTSA Administrator Mark Rosekind challenged auto dealers to do more. Under federal law, new-car dealers are only required to complete repairs for recalled new cars — but not for recalled used cars.

“Could car dealers make sure their customers leave the lot educated not just about the features of their new vehicle, but about how to drive it free of impairment and distraction?” Rosekind asked, urging the “industry will take a proactive safety approach that will save lives even before.”

The Obama administration last week unveiled a legislative proposal that would require used-car dealers and rental car agencies to fix any recalls on a vehicle before they can sell or rent the vehicle.

“We know that Americans will be safer if we implement these measures... If we all agree that safety comes first, that safety is everyone’s number one priority, then everyone should embrace these common sense, lifesaving measures. The standard needs to be that every time a rental car agency or a used car dealer hands the keys to a consumer, that car is free of safety defects. Every time,” Rosekind said.

“The rental car industry has embraced legislation to require remedies for rental cars,” he said. “Yet some in the auto industry oppose these proposals, or suggest instead much weaker steps — for instance, applying repair provisions only to vehicles when a manufacturer has issued a do-not-drive order. But we know such orders are extraordinarily rare — in fact, millions of vehicles with defective Takata air bags or faulty General Motors ignition switches are not covered by do-not-drive orders. It’s simply unacceptable that vehicles with such defects are rented or sold.”

The National Automobile Dealers Association has raised concerns about requiring all used cars to be repaired before being sold. Its president, Peter Welch, met in March with Rosekind asking NHTSA to make data “batch data” available to dealers to make it easier to check for open recalls -- since they have to manually enter every 17-digit VIN number. But NHTSA told NADA it didn’t have the money to do so.

Welch thinks dealers should focus on ensuring used vehicles with the most serious issues have recalled completed before being sold, rather than a blanket rule. “You have to use some common sense,” Welch said last week. “We want to work towards a workable solution -- a sensible solution.... We can’t clog up used car commerce.”

NADA spokesman Jared Allen said Friday that most recalls shouldn’t prompt the grounding of vehicles before recalls are completed. “Legislative and regulatory proposals to address open recalls should not unnecessarily raise costs for consumers or unfairly punish small businesses,” Allen said. “The overwhelming majority of recalls involve issues that do not warrant the drastic step of grounding, so we look forward to reviewing government estimates of how much these proposals would cost consumers and information on their commensurate safety benefit so Congress can make an informed decision on this important public policy matter."

Rosekind’s comments came after automakers recalled a record-setting nearly 64 million vehicles in more than 800 campaigns last year. Those callbacks came amid intense scrutiny by Congress after General Motors Co.’s recall of 2.6 million vehicles for ignition defects linked to at least 80 deaths and recalls of millions of vehicles for Takata air bags by 10 automakers linked to at least six deaths.

Rosekind noted that dealers don’t need to wait for legislation. “An act of Congress is not needed to address this situation: there is nothing stopping dealers, today, from handling all recalls before a vehicle is sold or rented,” Rosekind said, saying it is clear that “Americans are dying on our roads because of defective vehicles being rented or sold.”

NHTSA wants greater accountability from dealers of new automobiles, and fined two auto dealers last year for failing to fixed new vehicles before they were sold.

The agency has previously said that only about 72 percent of recalled vehicles get repaired.

The Obama administration would require new dealers to check for open recalls every time a vehicle from that manufacturer is brought in for service, and notify the owner.

The agency also wants funding from Congress to create a pilot program to ensure that motorists learn when they register their car or renew their license plates if recalled vehicles have been fixed.

Rosekind praised GM for examining its entire dealer network after the Pennsylvania dealer was fined.

“GM informed NHTSA late last month that based on its review, the company is making systemic changes in its computer inventory systems,” Rosekind said. “Those systems will now notify dealers about the recall status of vehicles on their lots — and the amount GM will reimburse the dealer for performing the necessary remedies. And, GM’s systems will no longer allow dealers to submit requests for dealer sales incentives on a vehicle until all open recalls on that vehicle have been remedied. So, dealers will know they stand to make money by remedying recalls, and that they will lose the opportunity to earn sales incentives until they perform those remedies.”

Rosekind called on all automakers and dealers to follow GM’s lead.

“All other manufacturers and dealers should embrace the proactive approach that GM is taking. There is no legal requirement, today, for GM to make these changes, just as there is no legal requirement to check for recalls when a car comes in for service, or to remedy used or rental vehicles under recall,” Rosekind said. “But there is no doubt these steps would make Americans safer. The more proactive we all are, the more lives we can save. Industry can work to solve issues like these before they require action by NHTSA or Congress.”

Rosekind was referring to program GM is rolling out this month to dealers called a "VIN lookup lock" that bars dealers from determining customer vehicle incentives or dealer incentives at the VIN level if there are open recalls that haven't been repaired. Starting in May or June, dealers also won't be able to go into the "dealer workbench" to apply for individual vehicle incentives without completing repairs.

GM spokeswoman Ryndee Carney says "dealers want to do the right thing" and noted they are also motivated by not wanting to be investigated by NHTSA. Most times a vehicle is sold without a recall completed is "an accident... Everyone once in a while human error kicks in," Carney said.

GM's new program was rolled out last month also includes new regular reports from GM on all current recall campaigns.