Pub. 14 2015-2016 Issue 2

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 5 new jersey auto retailer W W W . N J C A R . O R G Defective Cars Give Rise to Defective Laws President’s MESSAGE | BY JAMES B. APPLETON Every action has an equal and opposite reaction. It’s a simple rule of physics. And it’s pretty clear that the same rules apply in Congress. The tsunami of motor vehicle recalls has Congress rushing to “fix” the problem with legislation that is likely to do more harm than good. The sharp rise in the number of motor vehicle recalls over the past two years has consumers rattled, the media and legislators in an uproar, and dealers scrambling to keep up. It’s bad for the car busi- ness; sends the wrong message about the quality and safety of all brands, and it’s brought unwanted attention from regulators and legislators. In an effort to “fix” the problem, federal regulators and legislators at both the state and federal level could knock the retail automotive business off its stride. There is no question that, at first blush, a stop-sale on used vehicles subject to recall appears both pro-highway safety and pro-consumer. But, if you look closer at the issue, you will see that a government mandated stop-sale on all used vehicles subject to recall may actu- ally hurt consumers and will frustrate industry efforts to repair tens of millions of vehicles subject to safety recall. A government mandated stop-sale has to potential to slam the brakes on automotive commerce all across the US by making it impossible for dealers to sell used vehicles in inventory that are subject to recall. But, more importantly, it will also prevent deal- ers from taking in trade millions of used cars that (in the ordinary course of business) represent the consumers’ down payment on a new and safer vehicle. A government-mandated stop-sale on used vehicles subject to re- call will 1.) immediately devalue a significant asset for millions of New Jersey families; 2.) prevent used car owners, whose vehicles are subject to recall, from trading out of their potentially unsafe vehicle; 3.) keep those unsafe vehicles out on the road or force them into the unregulated private market; and 4.) slam the brakes on new car sales. Everyone agrees that serious recalls accompanied by a “stop drive” notice need to be grounded. When a recall involves a “stop drive”, vehicles are held in inventory until the vehicle is fixed. But many in Congress want to ground recalled vehicles for minor safety compli- ance matters, such as: a misprinted phone number in the owner’s manual; an airbag sticker that may peel off the sun visors; tire labels with incorrect gross axle weight ratings; and brake reservoir cap labels using pictographs rather than text. The focus of federal regulators and Congress should be on boosting recall completion rates. A stop-sale mandate doesn’t address the shortage of recall parts or why a quarter of vehicle owners simply choose not to fix their vehicle. Grounding vehicles with open recalls will not lead to faster repairs. The best way to strengthen consumer protections is to ensure that the most pressing safety recall issues are fixed in a timely manner. Grounding vehicles with open recalls will not lead to faster repairs. The best way to strengthen consumer protections is to ensure that the most pressing safety recall issues are fixed in a timely manner.