Legislation would force car rental companies, used car dealers to respond to recalls

One would think it a no-brainer for rental car companies and used car dealers to make sure all of the recall repairs on a car are done before renting or selling a car to a customer. But that is not the case.

Those repairs may or may not get done. Federal law does not require them to be made – at least not yet. But the Takada air bag recall may give added ammunition to those who want to change the law.

Leading Democrats and Republicans in the Senate and the Obama administration want to require repairs to be made prior to the rental or sale of any rental or used car. The administration has included a provision to that extent in its legislation, submitted last February, to reauthorize the National Highway Traffic Safety Administration (NHTSA). The administration's reauthorization bill is called the Grow America Act, and it contains a number of proposals beyond fixing recalled cars. The current authorization for NHTSA expired on Sept. 30, 2014.

In addition, a bipartisan group of senators has introduced a bill called The Raechel and Jacqueline Houck Safe Rental Car Act of 2013 (S. 921). It is solely devoted to the rental car repair topic. The bipartisan bill is named in memory of Raechel and Jacqueline Houck, two sisters who were killed in a tragic accident in 2004 while driving a rented Chrysler PT Cruiser that had been recalled for a power steering hose defect but had not been repaired. The car caught fire because of the defect, which caused a loss of steering and a head-on collision with a semi-trailer truck.  

The rental car industry favors the proposal. However, the auto manufacturers and dealers oppose it. At a Senate Commerce, Science and Transportation Committee hearing on rental car safety on May 21, 2013, the Alliance of Automobile Manufacturers raised concerns about the legislation and offered to work with the committee to resolve those concerns.

The auto manufacturers oppose the bill because they believe their repair shops would be overwhelmed with rental vehicles at the moment a recall was announced. Because of their "clout," rental car companies could demand that their cars be repaired first, said Mitch Bainwol, president and CEO of the Alliance. Ordinary consumers would be pushed to the back of the line. He also argued that many recall repairs do not impact safety, and should not prevent a rental or used car from being sold.

One year later, just before Memorial Day weekend 2014, Sen. Barbara Boxer (D-Calif.) put out a press release saying she had written letters to the heads of the major auto companies. She said her letter asked: “Now, an entire year has passed since the Alliance made that commitment. I would like to know – will your company commit to supporting this legislation that would prohibit rental cars under safety recall from being rented or sold to consumers until the defect has been repaired?”

The Alliance's opposition has not weakened, however. Wade Newton, spokesman for the Alliance, provided this somewhat cryptic response to a question about whether the Alliance had changed its opposition as of October 2014, "It has always been our understanding that the intent of all stakeholders is to not disrupt the existing relationship that auto manufacturers have with rental car companies. We are prepared to support legislation that effectively balances the concerns of all stakeholders." So the Alliance still opposes S.921 as written. A General Motors spokeswoman was unable to answer a question on that company's position.

The Alliance's position seems a bit weak, though. Rental car companies often make recall repairs themselves. A spokeswoman for Hertz says, "In most instances, we are instructed by the manufacturer to make the repair. In some instances, we take the recalled vehicle to dealers or other authorized repair shops."

That Hertz response weakens the auto manufacturers' position. Their inability to handle some major recall repairs themselves is already obvious from the Takada air bag recall roiling the industry right now. If rental car companies can do recall repairs, either in their own facilities or by using aftermarket contractors – assuming there is some mechanism to assure those repairs are done properly – why wouldn't the manufacturers and dealers want to have all the help they can get?

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