Bill Grounding Rental Vehicles Under Open Recall Needs Further Scrutiny

S. 921 Does Not Distinguish Between Serious and Minor Recalls 

Issue
To increase recall completion rates for rental vehicles, S. 921 would subject all rental cars under open recall to grounding within 24-48 hours.  The bill is overly broad since not all recalls require the drastic step of grounding.  The measure also gives large rental car companies a competitive advantage over small business dealers, and may force some dealers to discontinue providing loaner or rental cars to their customers.

Background
S. 921, introduced by Sens. Chuck Schumer (D-NY) and Barbara Boxer (D-CA), would regulate rental and loaner vehicles fleets of 5 or more and takes the far-reaching step of subjecting these cars under any open recall to grounding within 24-48 hours.

Franchised dealers play a vital role in ensuring that recalled vehicles are fixed.  Dealers support improvements to the recall process that maximize safety recall completion rates, as well as the grounding of vehicles under “Do Not Drive” orders issued by the vehicle’s manufacturer.  However, S. 921 is overbroad as it does not distinguish between serious and minor recalls.  By grounding all rental vehicles under open recall, S. 921 fails to differentiate between recalls that involve a defect that should be immediately addressed and those with a negligible impact on safety, such as recalls for a wrong phone number in the owner’s manual, or an airbag warning sticker that might peel off the sun visor.
 
Key Points
• S. 921 is overly broad since it would ground every rental and loaner vehicle under open recall and fails to distinguish between recalls that involve a defect that should be immediately addressed and those with a negligible impact on safety.  This bill would ground vehicles even if the recall did not actually impact passenger safety, such as an owner’s manual misprint.

• The bill does not reflect marketplace realities.  Recall remedies are often delayed when parts needed to fix the vehicle are unavailable through no fault of the dealer.  S. 921 purports to address this problem, but the standard in the bill for a “temporary fix” is a near impossible standard for automakers to meet and is unworkable in practice.

• This new federal mandate would regulate a dealership that offers loaner vehicles to their service customers the same as a multinational rental car company. A small business auto dealer with a loaner fleet of five vehicles would be subject to the same inspections, record-keeping, and regulatory burdens as a rental car company with hundreds of thousands of vehicles.  S. 921 also favors these big businesses by allowing large rental car companies additional compliance time.

Status
NADA testified before a Senate Commerce subcommittee on S. 921 in May 2013. The Committee reported the bill by voice vote in July 2013. Recently, Sen. Claire McCaskill (D-MO) introduced a National Highway Traffic Safety Administration reauthorization bill, S. 2760, which includes the text of S. 921.  Additionally, the Administration’s highway bill and another Senate bill, S. 2559, would ground all used cars under open recall sold by a dealer.  NADA urges Senators to address the flaws in S. 921 prior to the bill moving forward.    

 

September 2014