THE GM RECALL

Chevy dealer in Arizona being probed for sale of recalled car

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WASHINGTON -- A suburban Phoenix Chevrolet dealership is under federal investigation, accused of selling a recalled car without doing repairs that General Motors ordered last year.

Sands Chevrolet of Surprise, Ariz., is believed to have “sold and delivered at least one new vehicle to a customer without having had all required safety recall repairs performed on that vehicle,” the National Highway Traffic Safety Administration said in an audit notice posted today on its website.

GM’s recall affected 38,197 units of the 2013 Chevrolet Malibu Eco and the 2012-13 Buick Lacrosse and Regal built before December 2012. Sands Chevrolet doesn’t sell new Buicks. The cars were equipped with GM’s eAssist mild-hybrid system, which uses a battery in the trunk.

When it recalled the cars last May, GM said a malfunctioning generator control module could drain the battery, usually within the first 1,000 miles of operation. If the driver ignored a warning light, the engine could stall. In severe cases, it could lead to “a burning or melting odor, smoke and, in rare instances, a fire in the trunk.”

It’s against federal law for a retailer to sell a recalled vehicle that hasn’t been repaired. Federal lawmakers are proposing to extend that ban to rental and loaner vehicles as well.

The two-store Sands Chevrolet group, which also includes a dealership in nearby Glendale, Ariz., is led by Louis “Buzz” Sands. His family opened its first Chevy dealership in Phoenix in 1934. Sands, who has donated more than $10 million toward scholarships, a computer lab and football facilities at the University of Arizona, was a nominee for the Time Dealer of the Year Award in 2014.

Jerry Moore, dealer operator at Sands Chevrolet, wrote in an e-mail late Tuesday that the NHTSA probe came by surprise and prompted an internal audit. In a subsequent e-mail on Wednesday, he acknowledged that Sands Chevrolet sold two Malibu Eco sedans without doing the required repair work.

Though the store has a “very defined process” for fixing recalled cars, Moore said, two units were missed. The reason, he said, is that they were being stored off-site during an $8 million construction project at the Glendale store.

One of the cars was repaired 2 weeks after delivery to the customer from the Surprise store. The other one was repaired 90 days after delivery.

“We will add another step to our delivery process to keep this from ever happening in the future,” Moore said.

Audited dealers often settle with NHTSA rather than let the audit continue.

Last year, NHTSA reached a $125,000 settlement with Southern Honda Powersports, a motorcycle dealer in Chattanooga accused of selling 329 motorcycles without first doing recall repairs. That was significantly less than the maximum civil penalty it faced, which was $6,000 per vehicle sold. In November 2012, NHTSA increased the penalty to $7,000 per vehicle sold.

You can reach Gabe Nelson at gnelson@crain.com.


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