July 28, 2005

Consumer Victory: New Rule Requires Auto Manufacturers to Notify Dealers of the Most Dangerous Defects

Notification of Serious Defects Must Occur Within Three Days of Manufacturer Decision to Conduct Recall

WASHINGTON, D.C. – A July 6th National Highway Traffic Safety Administration (NHTSA) rule revising a final rule issued last year requires auto manufacturers to notify dealers within three days after the company tells NHTSA of its plans to conduct a recall when the defect poses an immediate and substantial threat to safety. The July decision altered the final rule issued last year in response to a petition for reconsideration filed by Public Citizen and the Center for Auto Safety (CAS). The new three-day rule addressing the most perilous defects is a victory for auto safety advocates.

Public Citizen and CAS pointed out in the petition last year that NHTSA’s previous final rule would allow auto manufacturers to notify dealers of defects long after the agency had been told by the manufacturer that a defect exists.   During that period, dealers could continue to sell vehicles containing identified safety defects, both endangering consumers and adding to consumers’ hassle, as they would have to return to the showroom soon after purchase to remedy the defect. The former rule saved manufacturers money by reducing the number of vehicles that would likely be remedied and reduced the pressure on manufacturers from dealers to quickly remedy defects so that vehicles could be sold.

In 1993, NHTSA had proposed that auto manufacturers notify dealers within five days of finding a serious defect. Automakers and dealers both objected, and action on the rule was postponed.    In 1999, NHTSA proposed a notification scheme that required notification of dealers only “within a reasonable time” but did not adopt it in final form until 2004, when auto safety groups objected.   

The 2005 changes to the final rule will prevent dealers from selling vehicles with identified dangerous safety defects – those considered an “immediate and substantial threat” to safety.   Public Citizen is watching to see whether implementation of this rule is fair and does indeed address all defects that pose a threat to safety. At the same time, NHTSA declined to extend this basic protection to all safety defects, as asked for by Public Citizen and CAS.

“After more than a decade of delay, the rule means that consumers can now expect serious defects to be fixed before they drive a new vehicle off of the lot,” said Public Citizen President Joan Claybrook. “It helps to preserve a baseline for safety when there is a known and dangerous safety defect.   The changes to the rule were common sense, and the very least that consumers should be able to expect.”

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