The Lemon Law Blog

Chrysler and GM are using the bankruptcy proceedings to bar persons injured in accidents due to defects in their vehicles. Thanks to the bankruptcy, owners injured or killed due to product defects in vehicles produced before Chrysler's bankruptcy filing are barred from making any claims. GM agreed to consider claims related to cars manufactured before the company is sold to a new entity, so long as the accident happens after the sale is completed. Claims related to accidents that occurred before the sale will remain with the "old" GM, and, as with Chrysler, plaintiffs would recover very little, if anything.

A few days ago, consumer groups petitioned the Federal Trade Commission yesterday to require that Chrysler vehicles display stickers warning prospective buyers of liability risks. A KGO-TV story on this controversy is here.

Congressman André Carson (D-Ind.) has proposed legislation that would require all automakers to purchase liability insurance if they are majority-owned by the federal government or if they have federal loans.

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The new Chrysler/Fiat corporation that emerged from the bankruptcy proceeding will negotiate settlements with owners of vehicles manufactured by the old Chrysler corporation. This concession was made in response to publicity generated by consumer groups. The new company said it would "recognize, honor and pay liabilities under Lemon Laws for additional repairs, refund or replacement of a defective vehicle (including reasonable attorneys' fees)."

New Chrysler will not pay any civil penalties under the lemon laws. It remains to be seen just how far Chrysler is willing to go in negotiating settlements.

Persons who suffered personal injuries because of defects in Chrysler vehicles, however, are out of luck. Consumer groups and victims' petition to the U.S. Supreme Court to preserve their rights was denied on June 9, 2009.

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Car dealers routinely accept trade-in cars promising to pay off the existing loan as part of the deal. But what happens when the dealer goes out of business without paying off the loan? That leaves the consumer owing money on the trade-in with the finance company looks to the consumer to keep paying. With many car dealers going out of business in the past year, consumers are stuck with loan payments on a car they no longer own. Some folks end up with two car payments--one on the trade-in and one on the car they bought.

A bill of the California Legislature, SB 95, would help deter this abuse and would add protection to victims. The bill would raise the dealer bond to $100,000 and would add a requirement that dealers pay off loans on trade-ins within a short time period.

KABOB client Stefanie Feliciano is a typical of persons caught in this scenario. A dealer failed to pay off the loan on a trade-in car leaving her with the loan obligation. This weekend a Sacramento TV station, KCRA, featured a story and video on Ms Feliciano and the bill, SB 95, accessible at http://www.kcra.com/money/19553191/detail.html.

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Accident rates for teen age drivers are pretty appalling. An aggravating factor is that parents often give older, unsafe cars to the kids. Given their driving habits, the kids should have the safest cars. Columnist Joseph White of the Wall Street Journal analyzed crash tests and reliability data to come up with recommendations for the best used cars for young drivers. In his article, White first eliminated sports cars for obvious reasons, pickups, SUVs that are prone to roll-overs, and very small cars. He looked for cars with stability control and excellent crash test results.

Using this criteria, among moderate priced cars, he recommends the 2004-06 Toyota Camry with the optional stability control, the 2008-09 Chevrolet Malibu, recent Ford Fusion models with stability control, and the 2006-09 Subaru Legacy. Among luxury used cars, White likes the 2003-06 Lexus ES, 2006 Audi A4 and the Prius models with stability control.

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Posted In: Auto Safety , Buying New Cars , Buying Used Cars

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As everyone knows, Chrysler and GM are disenfranchising thousands of car dealers. Lots of used car dealers have gone out of business because of the rescission and poor sales. When dealers go out of business, bad things can happen to buyers.

Dealers may forget to pay off the loan on a trade-in car or to send in the paperwork for an extended warranty or a factory rebate. The dealer may promise to fix or add accessories and may not be around to follow through.

So--do not trade in a car if you owe money on it. Sell it yourself or pay off the loan. If a dealer promises to fix something or add an accessory, make sure the work is done before you sign a contract to buy the car. Or, if a dealer looks really shaky, buy somewhere else!

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The Insurance Institute for Highway Safety sent the Honda Fit crashing into a Honda Accord, the Smart ForTwo into a Mercedes C-Class and a Toyota Yaris into a Toyota Camry -- each at 40 miles per hour. The results indicate what safety you may be trading for efficiency when your mode of transportation shrinks.

The Smart For Two had “extensive” damage into the area where the driver sits. The institute's findings indicate a human would have a high likelihood of sustaining head and leg injuries. The Yaris rated poor in the area of head and leg injuries as well. A driver of the Fit in a similar accident would have hit the steering wheel through the airbag in addition to sustaining leg injuries.

Continue reading "Smart, Yaris & Fit Fare Poorly in Crash Tests" »

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President Obama has nominated safety advocate Charles A. Hurley to head the National Highway Traffic Safety Administration (NHTSA). Hurley has been the CEO of Mothers Against Drunk Driving (MADD) for four years. Before that Hurley was with the National Safety Council and the Insurance Institute for Highway Safety. Having a strong safety advocate at NHTSA is indeed good news. Congress has to approve the nomination.

NHTSA sets safety standards for cars sold in the United States and is also responsible for regulating national average fuel economy standards. Consumer Reports blog entry on Hurley states that Hurley favors much stronger roof strength standards to prevent vehicle roofs from collapsing on occupants in rollover accidents.

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Some SUVs did not do well in roof crush tests conducted by the Insurance Institute of America. A report in the NY Times by Chris Jensen digests the Institute's findings.

Only four of the dozen small S.U.V.’s evaluated in a new test to see how well their roofs held up in a rollover crash got “good” ratings, and some of the country’s most popular models did not fare well.

The new Volkswagen Tiguan, Subaru Forester, the Honda Element and the Jeep Patriot received good ratings. The Suzuki Grand Vitara, Chevrolet Equinox (and Pontiac Torrent), the Toyota RAV4, the Nissan Rogue and the Mitsubishi Outlander received acceptable ratings.

The popular Ford Escape/Mercury Mariner/Mazda Tribute triplets and Honda’s CR-V got marginal ratings. The worst-performing models were the Kia Sportage and its sibling the Hyundai Tucson, which got poor ratings.

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Posted In: Auto Safety , Buying New Cars

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A Consumer Reports survey found that more than three-quarters (78 percent) of respondents said they were unlikely to consider buying a new car from an automaker in bankruptcy; 64 percent were very unlikely. Further, more than eight in 10 respondents said they are unlikely to consider buying a new car from a division that is being sold or phased out; 63 percent said very unlikely.

To counter this problem, President Obama announced this morning that the federal government will back their car warranties, in an effort to bolster consumer confidence.

The program will involve a separate account that will be funded with cash contributed by the manufacturer and a loan from the U.S. government to pay for repairs covered by the manufacturer’s warranty on each new vehicle. More details on the announcement are available in a NY Times article by Chris Jensen.

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Fleetwood Motor Homes filed Chapter 11 bankruptcy on March 10, 2009. Fleetwood, a leading RV manufacturer in terms of sales, announced it would continue operations while it reorganized. Fleetwood said it would close its travel trailer operation. Fleetwood joins Monaco Coach Corp and Country Coach in the bankruptcy courts. Other RV manufacturers such as Weekend Warrior, Western RV, Alfa Leisure, and Teton Homes have simply closed down. Coachman went out having sold its assets to Forest River.

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To the surprise of no one, Consumer Reports picks Honda and Toyota as the most manufacturers with the most reliable and highly rated cars and trucks. Subaru also scored well. Although GM and Ford have some highly rated models, overall the U.S. auto makers get poor grades. Chrysler ranks at the bottom with no recommended models.

CR's graph tells the story:

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Side air bags and electronic stability control are two of the most effective safety features available on new cars. The good news is that the federal safety agency is requiring auto makers to equip cars with side air bags by the 2010 model year and stability control by the 2012 model year.

The bad news is that buyers must buy expensive additional option packages, or even a more expensive model, to get these features. As reported by Cheryl Jensen in February 20, 2009, edition of the NY Times, a person buying a 2008 Nissan Altima 4-cylinder car would have to move up to the V-6 and buy the technology package for an added cost of $5,000 to $6,000.

Ms Jensen points out that even Honda, a leader in car safety, does not offer stability control on the basic 2009 Honda Fit and Insight models.

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Posted In: Auto Safety , Buying New Cars

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