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Dealers, OEMs oppose rental car safety bill

Legislation could put rental car companies first in line at the service department, NADA cautions
Monday, June 24, 2013 - 15:25
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The U.S. Senate transportation committee's consumer protection subcommittee held hearings in May on a rental car recall safety bill that could have significant implications for dealer service departments, rental companies and auto repair and body shops that rent or loan cars.

The bill (S. 921) would bar the rental or sale of cars that are "subject to safety recall," and authorizes the National Highway Traffic Safety Administration (NHTSA) to investigate and oversee rental car company procedures for recalls. The bill is named the Raechel and Jacqueline Houck Safe Rental Car Act of 2013, in memory of two sisters who died in a car crash in 2004 involving a rental car that had been recalled. The accident was attributed to a steering hose defect in the vehicle.

If passed as written, any company offering rental or loaner cars would have to ground any vehicles subject to a recall notice until the defect was repaired. The bill is co-sponsored by Senators Barbara Boxer (D-Calif.), Clair McCaskill (D-Mo.), Roy Blout (R-Mo.) and Chuck Schumer (D-N.Y.).

All recalls treated equally

The bill has gained reluctant support from the bulk of the rental car industry, although the American Car Rental Association (ACRA) has characterized the bill's scope as too broad. Last year, the four major rental car companies agreed to voluntarily follow the general principles of the bill.

Auto dealers, which often operate small fleets of rental or loaner cars, as well as an OEM trade association, testified in opposition. While both groups agree with the principle of the legislation, they were concerned about unintended consequences.

"I would like to make one thing perfectly clear: America’s franchised new car dealers support the purpose behind S. 921," said Peter Welch, president of the National Automobile Dealers Association (NADA) at the hearing. "Vehicles that are not mechanically sound or are unsafe to operate should never be rented to members of the public. Not only is it irresponsible, the legal liability for doing so is so severe that it would bankrupt most of our members."

However, Welch said that NADA was concerned that large fleet operators would use their economic clout to push themselves to the front of the line when it came to recall repair work, to the detriment of individual vehicle owners. Even if dealers and OEMs did not give rental fleet operators special treatment, they could conceivably clog the repair pipeline because all vehicles would need to be repaired simultaneously to avoid the fleet owner suffering significant economic losses.

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