Proposed Bill Could Cause Dealers To Turn Away Trade-ins

A bill being considered in the Senate could cause major issues for retail automotive. The Used Car Safety Recall Repair Act would prohibit dealerships from selling a vehicle unless all vehicle safety recall repairs are done. Part of that bill reads, “A dealer may not sell or lease a used passenger motor vehicle until any defect or noncompliance with respect to the vehicle has been remedied.”

This bill isn’t just for truly dangerous vehicles issues. It would include recalls that seem to lean more towards compliance than mechanical safety. For example, on November 1, 2013, Chevy announced the recall of their latest Camaro. What was wrong with these muscle machines? The airbag safety sticker on the sun visor was apparently more likely to peel off. Imagine a dealership unable to sell a Camaro without a warning sticker or a consumer wanting to trade-in their sedan for a Camaro and being halted because of the little sticker.

While the Camaro is just one example, this bill could create millions of other vehicular examples if it’s allowed to being enacted into law. As TownHall author Phil Kerpen noted, what would happen if vehicles were issued as being under recall with no parts available for the fix? What if the consumer wanted to trade-in their vehicle for something else? Under the proposed bill they wouldn’t be able to until it was repaired. What if parts for the recall aren’t available? That would force the consumer to either keep the car or sell it on their own. What would dealers do with their inventory that was recalled? While the bills passing would give them 18 months notice to make a change, how are they supposed to predict which used vehicles will be subject to recall and thus not good candidates for a trade-in?

On the other side of this debate are the creators of this proposed legislation. U.S. Senators Richard Blumenthal (D-Conn.) and Edward J. Markey (D-Mass.) co-introduced the bill. In a press release on the subject of the bill, Senator Markey said, “It is not acceptable for a dealer to collect all of the money and assume none of the risk. Whether a car is brand new or used, we need to make sure that all cars are safe before they leave the lot.”

While this bill is only in the deliberation stage at this point, it could piggyback its way into DOT secretary Anthony Foxx’s highway bill, according to Watchdog.gov. What is your take on this proposed legislation? Do you think that it would have a major impact on the retail automotive sector?