Efforts to Regulate Recalled Cars Stall in Congress

Currently, no law on the books requires rental car agencies or used-car dealers to repair recalled vehicles before renting or selling them to consumers. A legislative effort to change that is stuck in neutral as various players in the auto industry spar over how to fix the problem.

Consumer safety advocates call it a loophole that needs to be fixed. Regulators say new legislation would be a slam-dunk solution that could save lives.

But against the backdrop of a high-profile recall of millions of General Motors vehicles, multiple attempts to require recall-related repairs for used vehicles and rental cars have stumbled in Congress.

A 2011 Senate bill languished in legislative purgatory, as has a 2013 version of the same bill, both introduced by Sen. Chuck Schumer (D-NY). A separate effort includes the proposal in legislation to fund the Department of Transportation.

The push is idling at the moment, and associations in the auto industry have varied stances on the issue.

Rental car associations support legislation: In the proponent column is the American Car Rental Association, which backs a plan that would prohibit rental car companies from handing over the keys to vehicles that haven’t been repaired after a recall. In Senate testimony last year, ACRA Executive Director Sharon Faulkner noted that the rental car industry was initially tentative about supporting the legislation but eventually came around. “The end result is a proposal that will provide our customers additional assurance that the vehicles they rent are safe, and provides our industry with a uniform federal standard across the country and that addresses our original operational concerns,” she said at the time. Commenting to The New York Times, Faulkner said car rental companies already voluntarily handle repairs, in part due to pressure from consumer groups.

Car dealers want compromises: Meanwhile, the National Automobile Dealers Association has several concerns with recall-related legislation. NADA emphasizes that “dealers do not want unsafe vehicles on the road” but says in a position statement that the Senate bill is “overly broad” and would suspend from service all rental vehicles included in an open recall, even those that have a defect that has little or no bearing on safety. It also argues that the proposal would affect smaller dealers that offer loaner cars to their customers, holding them to the same compliance standard as multinational companies. As for legislation to regulate used cars, the association says that while it supports a 100 percent completion rate on recall-related repairs, it believes that the government should focus on ways of encouraging car owners to be more proactive about doing repairs, including prompting auto insurance companies to notify customers of car recalls. In comments to the Times, a NADA spokesman recommended a “graduated system” to decide whether a defect required an immediate repair; federal regulators disagree with this approach.

Opposition lingers from automakers: Proposed legislation has failed to advance in part because a major automotive group, the Alliance of Automobile Manufacturers, is against it. AAM says the law could expose automakers to lawsuits from car rental firms seeking compensation for lost business while cars are being repaired, or it could force car companies to prioritize recall repairs from rental firms over those for individual vehicle owners. While advocates have worked to address the lawsuit concern, an AAM spokesman told the Times that the bill’s language on the issue was still unclear. The situation has placed additional pressure on GM CEO Mary Barra, who has faced tough questions from legislators over the company’s opposition to the bill as a member of the alliance.

An Avis car rental facility in New York City. Rental car companies are among the targets of the proposed legislation. (photo by John Moore/Getty Images/Thinkstock)

Ernie Smith

By Ernie Smith

Ernie Smith is a former senior editor for Associations Now. MORE

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