WASHINGTON, D.C. -

An upcoming mark-up of a proposed Republican transportation bill featuring regulatory and consumer protection reforms, which may contain several provisions that could directly impact dealers, is scheduled for Wednesday morning. And several industry sources have already offered their thoughts on this measure (more on that below). 

Update: check out some of the ramifications for used-car dealers decided upon at Wednesday's mark-up meeting here.

First, the basics. 

South Dakota Republican Sen. John Thune, the chairman of the Senate Committee on Commerce, Science and Transportation, announced Thursday that the committee will convene Wednesday to consider and vote on S. 1732, the Comprehensive Transportation and Consumer Protection Act of 2015, which is sponsored by Thune and two other Republican senators: Surface Subcommittee chairman Deb Fischer, from Nebraska, and Consumer Protection Subcommittee chairman Jerry Moran, from Kansas.

The Republican transportation bill is fairly broad, affecting several areas including highway, rail and port-related provisions. Some of the most pertinent provisions of the bill for dealers, according to summaries provided by the Senate Committee, are included in the following excerpt: 

Vehicle Recalls 
Improves consumer awareness of vehicle safety information and requires franchised dealers and car rental companies to provide consumers with notification of open safety recalls. Increases the time consumers have to seek a free remedy for tire recalls and creates a state pilot grant to inform consumers of open vehicle recalls at the time of motor vehicle registration. 

Provides Increased Oversight of NHTSA
Following a record number of recalls for defects linked to fatalities, high profile failures by the auto safety regulator and expert testimony that the most immediate needs are to fix fundamental problem of NHTSA’s defect identification and investigation process and not substantial increased funding, the bill requires the DOT Inspector General and NHTSA to provide updates on how NHTSA is addressing these problems and directs audits of NHTSA’s management of vehicle safety recalls, public awareness of recall information, and NHTSA’s research efforts.

Promoting Crash Avoidance Technology
Adds a requirement that crash avoidance information, such as active braking and lane-tracking technology, be included next to the 5-star information on the car sticker for consumers purchasing new vehicles.

 (This chunk of summary, provided by the committee, is by no means exhaustive — read the full summary of the provisions here.) 

The Republicans aren’t alone in their aims to make changes to how recalls and other such defects are handled. Democratic Party senator Ed Markey, of Massachusetts, also made an announcement on Thursday regarding his sponsorship, along with two other Democrats on the Senate Commerce Committee, of “sweeping auto safety legislation” that was filed in the senate that day.  

Along with senators Bill Nelson, of Florida, and Richard Blumenthal, of Connecticut, the trio, in part prompted by their committee’s investigations into issues such as faulty GM ignition switches and defective Takata airbags, seek to make even deeper-impacting changes on legislation involving how recalls and defects are handled. Two key provisions in the proposed legislation that may directly impact dealers in the used-vehicle market include the following, according to a release from Sen. Markey:

Sec. 205. Used passenger motor vehicle consumer protection. 
Section 205 prohibits the sale or lease of a used vehicle that has an unrepaired safety defect or does not comply with an applicable motor vehicle safety standard. The prohibition does not apply to circumstances where recall information is not available or accessible at the time the vehicle is sold or leased.

Sec. 402. Dealer requirement to check for and remedy recall. 
Section 402 requires authorized dealers to check for and fix safety defects subject to open recalls when consumers take their cars in for routine maintenance.

(To see the full summary of provisions, click here.) 

Curious about how this may affect dealers, Auto Remarketing reached out to several in the business to see how they feel these pieces of legislation may impact the industry.

Shaun Petersen, the legislative and regulatory counsel for the National Independent Automobile Dealers Association, shared some of his advice with AR about how he expects Markey and his fellow Democrats to try to get their portion of legislation passed.

“And just by the way of background, my guess is, I think Sen. Markey kind of alludes to it, that the provisions in their bill, they’re going to try to get marked up and put into the Republican bill,” Petersen said. “Because, obviously, the Republicans control the Senate, and Sen. Thune is the committee chair. That would be the vehicle for moving it, any legislation, if anything does move.”

Petersen also says we’ll have to see what sort of verbiage is used to draw out the Democratic bill, which refers to “authorized dealers” but, in his best guess, will end up targeting franchised dealers.

“Without having seen that specific language in the Markey bill … there’s a similar provision in the Republican bill that is applicable to franchise dealers, and our guys wouldn’t be affected by that because we aren’t obviously ‘authorized dealers,’” Petersen said. “Which is what I’m assuming the language that Markey’s bill will have to make it clear that it’s talking about (for example) the Chevy dealer servicing a Chevy car and checking the Chevy system to see if there’s any recalls.”

Independent dealers will have to wait to see how they may be affected. Regardless, Petersen says they will still need to utilize their franchised dealership connections to have repairs made to vehicles with safety recalls.

“We would absolutely have to,” Petersen said. “Certainly on the Republican bill, and then what I’m assuming is going to come out of the Markey bill, that element is not going to change. We’re beholden to somebody else to fix these vehicles for us, and certainly we want to make sure our customers are aware of information pertaining to recalls.

“And we, as a best practice, are going to advise dealers to get them fixed if they can and use that as a best practice and make sure that they’re staying in communication with their customers and disclosing recalls, particularly with those that can’t be fixed.”

When reaching out to others in the industry regarding these legislative acts, a representative from the NADA provided Auto Remarketing the following statement on behalf of the association.

“The National Automobile Dealers Association is a strong supporter of data-driven efforts to improve recall completion rates, and believes that legislative or regulatory proposals should avoid unnecessarily raising costs for consumers or unfairly punishing small businesses. The overwhelming majority of recalls involve issues that do not warrant the drastic step of grounding, which is why NADA continues to work with policymakers and regulators to identify the most effective, most efficient and most consumer-friendly way to increase the nation’s recall-repair rate.”

Another industry resource, vAuto's Dale Pollak, was quite clear with his dissatisfaction with the dealer-facing provisions of the legislation.

“The responsibility of checking and remedying open recalls for all used vehicles prior to sale is an excessive and unreasonable burden to dealers,” Pollak said. “This is because dealers frequently do not possess the resources, expertise and/or parts to make the necessary repairs. Moreover, this situation is exacerbated in light of the fact that dealers cannot practically refuse trade-ins on the purchase of new vehicles.

“These trades represent a significant portion of the customer’s payment, and therefore, the receiving dealer must have the ability to turn the trade quickly in order to convert the asset to cash,” Pollak continued. “The inability to do so as a result of the proposed legislation will likely deny all dealers the necessary capital to sustain operations.”

Pollak offered his own advice to the policymakers.

“A more reasonable alternative would be for dealers to identify open recalls and prominently post notice thereof on all affected vehicles,” Pollak said. “This would allow consumers the opportunity to make informed choices and would facilitate more efficient recall remediation.”

Dealers – what are your thoughts? How do you feel the proposed legislation may positively or negatively affect your business and your customers? Any suggestions? Let us know in the comments or via one of our other social media outlets linked at the bottom of the page.