Should all recalls trigger free loaners?

WASHINGTON — Is Honda’s aggressive response to the Takata airbag crisis a special remedy for uniquely challenging circumstances or a template for the industry to follow?

That’s the question at the heart of a debate over whether consumers deserve access to free loaner vehicles when their own vehicles are under recall for a safety defect.

The Takata case has proved so large and complex that it has forced regulators and automakers to develop special strategies, including an industrywide action plan and phased recalls of airbag inflators that are likely to develop a defect over time. Given the severity of the defect — a lifesaving safety component that can become a deadly projectile — Honda and a few other manufacturers have made it easier for concerned consumers to obtain loaners while awaiting delivery of replacement inflators.

But two Senate Democrats say consumers should be entitled to free loaners or rental cars on any type of safety recall, not just ones with high-risk parts or the rare “do not drive” order. In their view, all recalled vehicles are inherently unsafe to drive.

Safety advocates say a stricter loaner policy also would provide financial motivation for automakers to expedite the production of parts and boost repair rates.

“It will increase the speed at which parts and software fixes are delivered to the dealerships because the manufacturers are the ones usually paying for that loaner vehicle,” said Jason Levine, executive director of the Center for Auto Safety. “They can expedite parts manufacturing when they want to for profit purposes. They need to expedite parts manufacturing for safety purposes.”

Responding to constituent complaints, Sens. Richard Blumenthal, D-Conn., and Edward Markey, D-Mass., last month issued a report that showed 11 of 17 major automakers lacked policies for providing loaners to customers affected by the Takata airbag recall.

The lawmakers are pressuring companies such as Ford Motor Co. and Volkswagen Group of America to take voluntary action, writing that they are “putting their customers at risk of death or horrific injuries.” A congressional aide familiar with their thinking said legislation hasn’t been ruled out.

NHTSA doesn’t have authority to require loaner vehicles in any recall, but it should include automakers’ loaner policies on its website and require them to be included on recall notices sent to owners, the report recommended.

Automakers are resisting efforts to have their loaner policies delineated that way.

Honda, which has the most vehicles affected by the Takata recall, has led the pack in finding vehicle owners and completing repairs, especially for first-generation “alpha” inflators that use a propellant with an increased risk of deterioration due to high heat and humidity.

Honda told dealers in 2014 that they could offer free loaners to customers seeking a Takata remedy without having to get permission from the factory each time.

Before that, the automaker accommodated customer requests case by case.

Meanwhile, all those who participated in a class-action settlement with several automakers for economic losses stemming from the defective Takata airbags received rental cars or were reimbursed for out-of-pocket rental expenses.

Suppliers have since ramped up production and eliminated many parts shortages, reducing the need for long-term loaners.

“We had customers in loaners for weeks or months,” American Honda spokesman Chris Martin said.

Honda has improved its loaner car program in recent years by allowing dealerships to give loaners or rentals to registered owners under 25, the normal age at which insurance companies begin coverage, and incentivizing them to expand loaner fleets, he said.

But Honda can’t justify replicating extraordinary efforts for the average recall, Martin said.

“It’s difficult to commit that what we are doing for the alphas would become the norm,” he said. “We just haven’t seen that level of risk for other recalls.”

Pressed by Blumenthal at a March 20 Senate Commerce Committee hearing about the ongoing Takata recall, Desi Ujkashevic, Ford’s global director of automotive safety, said the automaker is offering loaner vehicles for higher-risk Ford Ranger pickups and customers who come into a dealership that doesn’t have parts yet.

“I can promise we assess our customer’s safety needs and ensure we offer an adequate solution,” she said.

Martin, the Honda spokesman, notes that “not every recall is equivalent in NHTSA’s eyes.”

That’s essentially true of NHTSA officials, but the regulations themselves don’t do much hair-splitting.

If regulators or automakers determine that a safety defect exists, that vehicle may be subject to a recall. There’s no sliding scale of seriousness or urgency in the way regulations treat individual defects.

Given that, automakers worry that a stricter loaner policy would expose them to open-ended costs for all types of recalls.

Last year, 31 million vehicles were recalled, according to NHTSA.

An official with an international automaker, who requested anonymity to discuss a sensitive topic, said that in most cases, providing a loaner is a matter of convenience and customer service rather than improving consumer safety.

There are costs and complications for having a blanket loaner policy, this executive said, including determining whether the factory, supplier or distributor pays for costs associated with the recall. Suppliers typically bear some responsibility for the cost of repairs, but most contracts don’t require them to pay for alternative transportation, so that cost would fall to the automaker.

Levine, of the Center for Auto Safety, brushed off concerns about providing loaners for too many recalls that don’t raise immediate safety issues, saying that if the industry ever got to that point, stakeholders could prioritize which recalls would qualify.

Loaner leaders

Sens. Richard Blumenthal and Edward Markey evaluated 17 automakers on their loaner policies for consumers affected by the Takata airbag recall. 6 companies received a passing grade.
• BMW of North America
• Fiat Chrysler Automobiles
• Honda North America
• Nissan Group of North America
• Subaru of America
• Toyota Motor North America
Source: Blumenthal/Markey loaner car report

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