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New 'Used' Cars and Rentals May Have Serious Safety Problems

 / Updated  / Source: The Detroit Bureau
Image: Chevrolet Cruze Eco
A Chevrolet Cruze Eco is displayed at the General Motors headquarters April 1, 2014, in Detroit. General Motors has recalled millions of vehicles in recent months due to a power steering defect and a faulty ignition-switch.Joshua Lott / Getty Images

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When Raechel and Jacqueline Houck’s car suddenly veered out of control, shooting across the highway median and into an oncoming tractor trailer, killing the two young women, the company that rented them their Chrysler PT Cruiser initially tried to claim the driver, 24-year-old Raechel, might have been either “suicidal or on drugs.”
The 2004 accident was ultimately ruled to have been caused by a known safety defect, the subject of a recall, that wasn’t repaired by Enterprise, one of the nation’s largest rental firms. It took the Houck family six years to win a $15 million verdict in 2010. But the problem has not gone away.
Despite efforts by Sen. Barbara Boxer, a California Democrat, to enact legislation that would force rental companies to pull recalled vehicles from their fleets until they are repaired, a bill named for the two Houck sisters so far has failed to pass in Congress. More recent efforts that would also cover used vehicles on dealer lots haven’t gone anywhere — though legislation is being considered in California.
With the surge in safety-related recalls this year — more than 11 million from General Motors alone this year, according to data from the National Highway Traffic Safety Administration — and the flurry of headlines surrounding GM’s long delay in recalling 2.6 million vehicles over defective ignition switches, it might come as a surprise to American motorists that rental car companies can keep faulty vehicles on the road. And dealers not only don’t have to make repairs, but also don’t even have to disclose that a used vehicle they’re selling is subject to recall.
“It should be a slam dunk,” David J. Friedman, acting administrator of the National Highway Traffic Safety Administration, recently told the New York Times. “To me it is hard to oppose ensuring that people who buy a car, whether it is new or used, or whether you are renting a vehicle, can have the confidence that it is safe.”
Pressure is mounting, at least from the consumer side, to take action. The Department of Transportation is laying out a plan to force repairs as part of its four-year budget proposal. Dubbed the “Grow America Act,” it would cover car dealers and rental firms.
A separate measure facing the Senate, and named after the Houck sisters, would be limited to rental companies. The measure has been struggling to gain passage since 2012. While rental firms initially raised concerns, they soon lent their support. A letter sent to Senate leaders in September 2012 by the four leading U.S. rental firms declared, “We firmly believe that this consensus legislation accomplishes (the) objective” of keeping recalled vehicles out of rental fleets until they are repaired.
The four firms — Enterprise Holdings, U-Save Auto Rental of America, Dollar Thrifty Automotive Group, and Avis Budget Group — represent about 90 percent of the market, according to a spokesman for Boxer, a lead sponsor of the bill. They have all agreed to voluntarily follow the measure's recommendations, even though it has been stalled on Capitol Hill for two years.
There are about 2 million rental vehicles in service at any given time, according to rent-a-car trade industry data. But that figure is dwarfed, in comparison, to the number of used vehicles that trade hands each year. According to CNW Marketing, that comes to somewhere near 50 million cars, trucks and crossovers, or roughly three times the annual market for new vehicles.
How many of those “previously owned” models have been subject to recalls, and how many have actually been repaired, are unknown numbers — in large part because used car dealers aren’t required to track that information, or to disclose it to buyers.
Only about 70 percent of older vehicles subject to a recall ever actually undergo repairs, Greg Martin, the chief spokesman for General Motors, told The New York Times in March. The number can vary, usually depending upon such factors as the age of the vehicles subject to a recall, as well as the severity of the safety defect. Manufacturers also can influence the repair completion rate by more actively reaching out to owners.
The National Automobile Dealers Association has expressed support for efforts to get used cars repaired, while also lobbying to block legislation. The powerful trade group complains that it would be unfair to target dealers who handle only a portion of the used vehicles sold each year. A major share of the business is handled on the personal level, through classified ads or when cars are sold between family, friends and co-workers. It also has concerns over the rental car legislation.
A challenge will be to find ways to make sure that all used cars, when sold, are checked against the national recall database and, if necessary, repaired.
The good news is that NHTSA recently launched an online database that motorists can check to see if their vehicle is subject to a recall. It can also be accessed through NHTSA’s consumer site, www.SaferCar.gov.
Editors's note: This story has been updated to clarify the pending Senate legislation and rental car companies' support for it.
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