Last week I wrote about my advocacy trip to Washington, D.C. Keeping with that vein, I want to comment on a piece of pending legislation that in its current form is overly broad and would, ultimately, hurt consumers.
There is a bill working its way through the House (HR 1181) that would instantly devalue the trade-in value for millions of vehicles for millions of consumers. Congress is looking at measures that would ground all rental and all used vehicles under any open recall. Before anyone claims I’ve lost my mind, let’s look at the matter pragmatically. The wide paintbrush of Congress’ language indiscriminately lumps all recalls into one category regardless of severity or potential levels of risk. Recalled cars that genuinely jeopardize public and driver’s safety should be grounded (i.e. not driven). No one disputes that. Recalls fitting this description include faulty ignition switches and airbags. These failures, in some cases, tragically resulted in deaths. But vehicles recalled for problems that have virtually no impact on public safety or the user should not be included in this legislation. Minor errors such as an incorrect phone number in an owner’s manual or a peeling warning sticker on the sun visor should not qualify a vehicle for grounding, yet they would be included under the pending plan. These missteps do not make a vehicle unsafe for driving, selling, or trading-in.
To further complicate the process, HR 1181 would also prohibit dealerships from selling or wholesaling a used vehicle under open recall. Under this policy, few franchised dealerships would be willing to risk taking “off-brand” vehicles in trade. For example, a Chevrolet dealership is unlikely to accept a Ford trade-in subject to recall since the Chevy dealer is not authorized to fix the vehicle and is barred under this proposal from selling it to a Ford dealer that can repair the vehicle. This leaves the consumer with fewer options or choices, and millions of used cars stagnating on dealers’ lots.
The proposed thinking also impacts trade-in values when a customer goes to purchase a new car. A vehicle that is under an open recall would make it more difficult for consumers to trade their used car to dealers because the value is significantly less as a result of the open recall, or the dealership may not accept it at all. This action could force that vehicle into the unregulated private market, thus making the chance for recall repair even less.
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Dealerships support a 100 percent vehicle recall completion rate. They want to fix the vehicles that have recalls. They want to take care of their customers. But the recall completion rate sits at about 75 percent, in part due to lack of available parts from the automaker or supplier, and worse, recall notifications to the consumers seemingly falling on deaf ears. Too many car owners do not take the necessary steps to ensure their car is properly maintained, including the recalls. To be perfectly clear, vehicles that pose a public safety threat should not be driven and should be repaired immediately. However it is vitally important to differentiate between recalls that meet that criteria from those with a negligible impact on safety. Policies should be tailored to boost consumer recall response and completion rates.