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Talks under way on requiring used-car recall repairs

David Shepardson
Detroit News Washington Bureau

Washington — Senate staffers, auto industry officials and others held intensive talks over the weekend on a proposal to require recalled used cars to be repaired before being sold, The Detroit News has learned.

The proposal — if adopted — would be one of the most significant auto safety reforms in years and pose a challenge for the nation’s 17,000 new-car dealers that sell millions of used cars a year. But it is still unclear how expansive the requirement would be and whether the Republican majority in the Senate will agree to it.

Under current law, dealers are required to repair only new recalled vehicles before a sale. It is legal for dealers or private individuals to sell used cars without competing recall repairs or even disclosing pending recalls to prospective buyers.

The Obama administration and many Democrats want a new law to require those repairs. Auto dealers have strongly opposed the measure, arguing that they could be forced to hold onto recalled vehicles awaiting the availability of parts. In some cases, they would have to send used cars they bought in a trade in to rival dealers for repairs before they could sell them.

The Senate is expected to vote on a highway bill later this week.

In March, Sens. Richard Blumenthal, D-Conn., and Ed Markey, D-Mass., introduced legislation that would require the repairs, saying it addresses “the unacceptable gap in consumer protection that confuses car buyers who believe they are buying a product with safety assurances, and threatens the lives of everyone on our country’s roadways.”

A bill sponsored by Sen. John Thune, R-S.D., chair of the Commerce Committee, and approved by the panel last week would not bar the practice of dealers selling unrepaired recalled used cars — but would require notification to buyers. The panel agreed to add an amendment barring rental car firms renting a vehicle under recall that has not yet been repaired.

In January, a Texas man was killed by shrapnel when a defective Takata air bag exploded. He had purchased a 2002 Honda Accord in 2014 that had been recalled in 2011 — but he had no idea it had been recalled, according to a lawsuit filed in March. More than 32 million vehicles have been recalled for defective Takata air bags in the United States linked to eight deaths and more than 100 injuries.

The push comes as three auto industry trade groups are urging members of Congress to oppose a proposal to create new criminal penalties for auto executives who fail to disclose deadly defects.

In a joint e-mail to congressional staff last week, the Alliance of Automobile Manufacturers, the Association of Global Automakers and the Motor & Equipment Manufacturers Association urged Congress to oppose some amendments sponsored by Blumenthal and Markey.

The auto trade groups argue the proposals “would do more harm than good to the future of auto safety by criminalizing the business of manufacturing; requiring the release of confidential business information and personal information of consumers; and stifling innovation by mandating certain technologies that have not been proven in the marketplace.”

Earlier this month, Sen. Bill Nelson, D-Fla., introduced legislation backed by Blumenthal and Markey that would require automakers to install warning lights on vehicle dashboards to notify owners of safety recalls, lift the cap on delayed recall fines and would require crash-avoidance technologies.

Last week, the Senate Commerce Committee rejected most amendments proposed by Blumenthal and other Democrats to Thune’s bill.

The panel agreed to add a provision that would allow for increased funds for the National Highway Traffic Safety Administration if the Department of Transportation Inspector General certifies that reforms have been implemented.

Blumenthal also wants to lift the current $35 million maximum cap on recall fines. Last week, the Senate Commerce Committee voted to raise it to $70 million. The Obama administration has called for hiking it to $300 million, saying the current fines are “rounding errors” for automakers with tens of billions of dollars in annual revenue.