AutoNation's about-face draws fire from 2 Senate Democrats
WASHINGTON -- A duo of Senate Democrats who’ve introduced legislation aimed at preventing the sale of used vehicles with unrepaired safety recalls blasted AutoNation Inc.’s reversal of its 16-month ban on the sale of such vehicles at its dealerships.
As Automotive News reported Monday, the nation’s largest auto dealership group abandoned its pledge to not sell used vehicles with unrepaired safety recalls.
AutoNation CEO Mike Jackson said the company still repairs all recalled vehicles when parts are available, and now discloses the presence of open recalls on used vehicles it cannot fix. An AutoNation spokesman told Automotive News today that the company also plans to inform consumers who purchase a used car with an unfixed recall when repair parts are available.
U.S. Sens. Richard Blumenthal, D-Conn., and Edward Markey, D-Mass., called the decision “deeply troubling,” and called on the company to inform customers of the policy change.
“The company now has an obligation to publicize its decision to reverse course as widely as its original move towards better safety,” the duo said in a joint statement. “Unfortunately, until Congress acts to ensure there is a level playing field for used car dealers who want to do the right thing for their customers, we will continue to see cars with deadly defects on our roads. In the wake of this announcement, we plan to double down on efforts to protect consumers from the worry that they might be buying a used car with unrepaired recalls.”
After taking its unusually public position on the issue -- one at odds with the National Automobile Dealers Association -- AutoNation’s reversal highlights the difficulties faced by dealers and consumers as a result of federal law, which bars retailing of new vehicles with open recalls but allows retailing of used vehicles in the same situation.
The issue has become an auto industry flashpoint after deadly safety crises such as those involving General Motors faulty ignition switches and Takata airbag inflators. Blumenthal and Markey in 2015 introduced legislation to stop the sale of used vehicles with open recalls but that effort has failed to gain any traction in the Republican-controlled Congress.
The National Highway Traffic Safety Administration, meanwhile, is working on a pilot program for state motor vehicle departments to alert vehicle owners to recalls when applying for registration. The agency declined to comment on AutoNation’s decision.
Jackson frequently discussed AutoNation’s policy after implementing it in the summer of 2015, and the company featured it in advertising messages. After launching the initiative, Jackson called the nation’s recall system “a dysfunctional nightmare,” adding that “as part of the industry, we have to hold a mirror up and say, ‘What can we do better as a company?’”
AutoNation also lobbied congress to take action on the issue, spokesman Marc Cannon said, who called the criticism from Markey and Blumenthal unfair.
“We have been working for 16 months to help get legislation passed. We've gotten nowhere, and they’ve gotten nowhere,” he said. “We’ve set the example that nobody in the industry has followed.”
The company softened its stance in late 2015 when it began wholesaling some vehicles at auctions when a lack of available recall parts grounded vehicles for six months or more, attaching prominent signs to the vehicles that noted the vehicles were under recall.
The decision to abandon its policy was influenced in part by limited supply of replacement Takata airbag inflators that has tied up vehicles in AutoNation’s inventory. The vast majority of the roughly 6,000 vehicles that AutoNation had on sales hold in November contained Takata inflators under recall, Jackson said.
In addition, Jackson said the company’s recall signs placed on vehicles it sold at auctions were often removed.
“I'm not big enough to change how the recall system works. I try. Valiant effort,” Jackson told Automotive News. “Conclusion: It is the way it is.”
Rosemary Shahan, president of advocacy group Consumers for Auto Reliability and Safety, cautioned that dealers selling used vehicles with open recalls still face liability under state laws despite the lack of a federal ban.
“Dealers forget there’s a whole body of state law, and it is illegal for a dealer to sell an unsafe product, period, whether it’s under recall or not,” she said.