Carmakers Say Recalled Rental Cars Went Unfixed For Months

No law exists for preventing cars to be rented without fixes

It's been four months since the National Highway Traffic Safety Administration first announced that it was investigating 3 million rental cars that had been recalled for defects, but has any action been taken?

The recalled vehicles included 29 models from General Motors Co., Ford Motor Co. and Chrysler Group LLC that had been sold to rental car companies. For most of those four months, no updates or details from that investigation emerged – until just recently, when GM and Chrysler informed NHTSA that tens of thousands of these recalled rental cars went unrepaired for months or longer.

The carmakers told NHTSA that, 30 days after a recall, 10 to 30 percent of the recalled vehicles in rental-car fleets had been repaired. By 90 days, they said, the repair rate had improved to about 30 percent – and that, within a year, the repair rate had increased to 50 percent or higher.

Ford did not reveal its data, claiming that release of the info could have a negative effect on its relationship with rental car companies and result in a decrease in sales of its vehicles to those companies.

Recalled Cars Can Be Rented Without Notice

The entire situation is a frustrating one for auto-safety advocates, because, believe it or not, no law currently exists that specifically requires rental car companies to make those repairs to recalled vehicles before renting or selling them to consumers.

NHTSA said its investigation is ongoing, and that the recalled vehicles being investigated were built between 2000 and 2010.

In a statement, NHTSA said that while "dealers have a legal obligation not to sell a new vehicle after they have been notified of the recall by the manufacturer until the defect has been remedied, NHTSA does not have the legal authority to require consumers, including fleet owners like rental car companies, to have recalled vehicles fixed."

But even though no specific law addressing this issue is currently on the books, Clarence Ditlow, executive director of the Center for Auto Safety (CAS) has noted right along that the Federal Trade Commission Act states that companies "shall not engage in unfair trade practices. And, not repairing a defective vehicle after it has been recalled, before renting it out, is an unfair trade practice, and is a violation of the act."

Still, Ditlow would like to see the investigation lead to a more detailed, more pointed law that specifically addresses this practice.

Regarding NHTSA obtaining information from the carmakers on how well rental car companies did in terms of repairing recalled cars, Ditlow described that as "good government in action. Until NHTSA acted, rental car companies claimed they did a good job, but NHTSA's recall information shows that no major rental company was doing a good job. All of them exposed consumers to driving unrepaired recalled vehicles that were unsafe to drive. "

NHTSA's recent statement continued: "While the extent of the problem is not fully known, NHTSA is concerned about rental vehicles not being repaired. Recalls are a serious safety matter that should not be ignored and we believe rental car companies have a responsibility to their customers to provide safe vehicles for use."

The agency stated that it "monitors every safety-related recall to ensure high repair rates. When the agency sees unsatisfactory repair rates, it can and does ask manufacturers to take additional measures to notify owners and improve the response."

Rental Companies Receive Notices When Customers Do

Chrysler spokesman Vince Muniga noted that rental car companies "receive recall notices at the same time as a private party. These recalls are sent via regular mail. As a matter of policy, we send additional notes to owners of vehicles as a courtesy follow-up after a period of time if we notice the car has not been serviced."

The timing of the notification has been the subject of debate.

Auto-safety advocacy groups are concerned about how promptly the recall notices are sent to the car-rental companies. Ditlow, for one, said he would like to see NHTSA require the automakers to do a "direct and early notification of the defect to the car-rental companies" – instead of waiting for the general recall letter to go out to car owners.

Safety advocates are also concerned that rental cars move around so much, often being driven from one city to another, that weeks or months can pass before a rental company discovers that the model has been recalled – which means it takes even longer for repairs to be made.

GM spokesman Alan Adler said that, "in light of statements by the rental car companies that there is a relatively rapid turnover of rental car fleets, it is possible that the state registration data may overstate the vehicle populations owned by the rental car companies at the time of a recall campaign. In turn, this could result in the reporting of a lower safety recall completion rate."

Tragic Incident At Enterprise Rent-A-Car

When the NHTSA investigation was launched in November, the agency issued a statement saying it had been informed "of incidents involving allegations of personal injury and death claimed to have been caused by safety defects and failures to conform to minimum Federal Motor Vehicle Safety Standards (FMVSS) on rental car vehicles for which a safety recall to remedy the safety defect or noncompliance had allegedly not been performed prior to the rental car company's lease of the vehicle."

In that statement, NHTSA also noted the petition that had been filed with the Federal Trade Commission seeking to prohibit "at least one rental car company from renting vehicles on which safety recall campaign remedies remain outstanding."

That would be Enterprise Holdings, which is presently the largest provider of rental cars in North America, via the three major brands it owns -- Enterprise, Alamo and National. Enterprise has said it is cooperating with the investigation and that, most cases, its companies "place a 'hold' on recalled vehicles so they are not rented until the recall work is completed."

The FTC petition was filed last August by CAS and Consumers for Auto Reliability and Safety (CARS), after Enterprise admitted liability at the end of a five-year lawsuit that stemmed from the 2004 deaths of two young women in a car wreck. According to the petition, the women, Rachel and Jacqueline Houck, were killed in a collision that was indirectly caused by a defect in a PT Cruiser that had been recalled – but that the defect was not fixed before it was rented to the women by Enterprise Rent-A-Car.

The petition said the Cruiser had been recalled due to a risk of under-hood fires, and that the women were not informed of the risk – and that, while driving in California, the car caught fire, causing a loss of steering power that led to a head-on collision with a semi-trailer truck, killing the women instantly.

The petition said that at least four individuals had rented the vehicle after Enterprise received a recall notice. After five years of fighting the suit, Enterprise admitted liability, and the parents of the Houck women were awarded a damages-only verdict of $15 million.

Ditlow of CAS hopes the NHTSA investigation ascertains "how widespread this practice is in the rental-car industry – either not fixing the vehicles before they are rented, or not fixing them soon enough -- or selling or renting recalled vehicles to consumers without fixing the defect or informing them of the recall."

When the NHTSA investigation was launched in November, Bob Barton, president of the American Car Rental Association, issued a statement saying that most recalls issued by manufacturers "do not require the owner of the vehicle (whether it be a rental company, leasing company or a private individual) to ground a vehicle and cease operation."

The Association does not maintain an industry standard, Barton said, but each car-rental company "follows its own pre-established operating guidelines." He added that in most cases, the rental-car companies don't rent the vehicle until the recall work is completed, and that the practices of many companies "exceed what is required."

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