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Feds Launch Probe Into Rental Car Recall Delays

Investigation triggered by evidence some firms regularly delay repairs on defective vehicles.

by on Nov.22, 2010

Rental firm accused of delaying repairs on recalled vehicles if they're in demand.

Federal regulators want to know whether daily rent-a-car companies may be risking the lives of their customers by delaying repairs for known safety problems in order to keep potentially defective vehicles in circulation.

The investigation comes as several rental car firms defend their actions in court.  As TheDetroitBureau.com first reported, last July, officials with Enterprise, Alamo and National have acknowledged in court delaying safety-related repairs, in one manager’s words, “when demand called.”

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But industry officials are denying such allegations and, if anything, are blaming automakers for failing to properly notify fleet managers of pending recalls.

The National Highway Traffic Safety Administration’s new investigation is specifically examining how major rental car companies have handled 29 individual recalls ordered by Detroit’s Big Three automakers.  In all, those recalls involved 3 million vehicles sold to rental companies.

The federal agency, which oversees automotive safety issues, says it, “has been informed of incidents involving allegations of personal injury and death claimed to have been caused by safety defects and failures…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.”

But while there is no law that specifically requires a fleet to pull recalled cars out of use until repairs are made, delaying a recall could put a rental firm at risk of a lawsuit, as Enterprise – which also owns daily rent-a-car companies Alamo and National – has learned.

Last July, the company was in the midst of a case involving the deaths of two sisters who were killed, in 2004, when the Chrysler PT Cruiser they had rented from Enterprise collided with a tractor trailer and caught fire.  The vehicle had been rented out three times despite the fact that the firm had been notified of a safety-related recall. (For the full story, Click Here.)

During the trial, Mark Matias, a former San Francisco-area manager for Enterprise admitted on the stand that, “When demand called, we rented out recalled vehicles.  It happened, I won’t lie.”  Enterprise earlier had accused one of the sisters for having caused the wreck, claiming she had either been “suicidal or on drugs.”

Eventually, the parents of Rachel and Jacquie Houck won a $15 million judgment against Enterprise.

Despite the admissions in court, Sharon Faulkner, a spokeswoman for the American Car Rental Association, said renting out cars that need safety repairs is not a normal industry practice.

“You pull those cars and you park them,” Faulkner told The Detroit News. “It’s just foolish for anyone to risk a lawsuit, death or injury. It’s just stupid. You don’t do it.”

The industry notes that it grounded tens of thousands of Toyota vehicles that were involved in a sudden acceleration recall, earlier this year, until repairs were made.  The Japanese maker was extremely aggressive with that recall, critics counter, going so far as to tell its dealers not to sell the affected vehicles until repairs could be made.

Meanwhile, New York Senator Charles Schumer has joined with the Center for Auto Safety in asking the Federal Trade Commission to take steps to require immediate repairs of recalled vehicles in rent-a-car fleets.

Iif automotive dealers are not allowed to sell recalled vehicles without first fixing the safety issues,” he wrote the FTC, “then rental car companies should be held to the same standard.”

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