Separately, in early April 2008, an Automotive News reviewer said the Smart 1.0 liter, 70 hp three-cylinder engine had poor acceleration, the five-speed automated manual transmission makes the car rock back and forth as the driver shifts gears, and on the highway the driver must constantly tug the steering wheel left or right to keep going straight.On the other hand, they are exceedingly easy to park!
]]>In April 2008, the Institute released its side impact crash results on midsize cars. Overall, the study shows that small cars are more dangerous than large cars. Occupants of the smallest cars are about 51 percent more likely to be killed in a crash than those in midsize or large cars.
When it comes to frontal crash tests, "good" ratings on small cars only means they are safer than another small car with a lower rating. They are not necessarily safer than a large car with a lower rating. But side-impact crash tests are different. The impact comes from a ram that strikes the car. Because the stricking force is the same for each test it is possible to compare vehicles of different sizes. This leads to some surprising results in the side-impact tests--the small Honda Fit has a higher rating than a 2008 Ford Crown Victoria.
]]>The cases involve Michelin's "PAX" run-flat tire system consisting of a special tire, support ring, wheel and tire presssure monitoring system. The PAX Systems have proven to be a disaster for consumers--the tires wear prematurely and replacements, which only available from Honda and Michelin dealers, are very expensive costing as much as $300 per tire. Many owners had a great deal of difficulty even finding a Honda or Michelin dealer that had the special equipment needed to replace a PAX tire.
In November 2007, Michelin announced it was throwing in the towel on the PAX System. According to a report in the trade presss, Michelin said it was ending research on PAX "because there is no big market development." Of course, this is a euphemistic way of saying the PAX system has been a failure.
The federal class actions have now been reassigned to a federal judge in the District of Maryland. A separate California state court action is pending in the Alameda County Superior Court on behalf of California owners.
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Reacting to that failure, in 2000, Congress enacted a law to address the agency's failure to spot safety-related defects in cars, trucks, and tires. The law, known as the Transportation, Recall Enchancement, Accountability, and Documentation Act ("TREAD") directed the NHTSA to report all consumer complaints, warranty payments, and field reports in the event of an injury or death involving a vehicle or tire defect.
However, for years NHTSA did nothing and then made things worse when it enacted regulations to gut the new law. The regulations allow the auto manufacturers to make the data confidential and unavailable to the public. No good reason exists except to protect the auto industry.
The agency has taken other steps to shut out the public and safety advocates from obtaining information on auto safety. The agency formerly had a public library with a great deal of information essential for evaluating the agency's activities. However, in 2006, the agency shut down the library for all practical purposes.
Continuing with its trend to secrecy, NHTSA will not allow journalists to interview the agency's safety experts, which is contrary to the practice going back 20 years. Chris Jensen of the NY Times covered this topic in the NY Times auto blog.
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That consumers who sign the contracts with binding arbitration clauses unwittingly are foregoing their right to a jury trial is bad enough, but the NAF and similar arbitration forums are, to put it mildly, unfair to consumers. A California law requires these forums to information on who wins these proceedings. The nonprofit group Public Citizen analyzed the NAF data and found that California consumers lost 94% of some 19,000 cases! One arbitrator handled 68 cases in a single day. There is no in-person hearing. Arbitrators who rule for consumers are soon dropped by NAF.
Consumer horror stories involving NAF are common. Mother Jones magazine covered this story in some depth in an article in November 2007.
Other arbitration forums such as the American Arbitration Association are almost as bad for consumers as NAF. Taking a dispute to AAA is quite expensive (especially when it comes to paying the arbitrator). The arbitrators favor the big corporations knowing they won't be chosen for future arbitrations (more fees) if they rule for the consumers.
The car dealers want no part of arbitration when it comes to fighting with the manufacturers over their franchise rights. In 2002, the dealers succeeded in getting Congress to enact a law banning binding arbitration clauses in the dealers' sales and service contracts with the auto manufacturers!
]]>On November 28, 2007, consumer groups held a press conference on the steps of the Capitol to highlight the defects in the law. Rosemary Shahan of the consumer group CARS pointed out there is no good reason a buyer should have to pay anything for the two day right of return. If the vehicle is returned, the law provides for reasonable "restocking" fees and that should be sufficient compensation for the inconvenience.
Rosemary presented KABOB client Oscar Marin Fuentes as someone who was not protected by the Car Buyers Bill of Rights. Fuentes purchased a used 2005 Chevy Silverado from Capital City Motors in Sacramento. The dealer had Fuentes, who does not speak fluent English, waived the two right of return. With a day or two after taking delivery, Fuentes noticed that door would not seal and air was coming in gaps in the cabin. Fuentes returned the truck to the dealer the next day asking for his $23,500 back, but the dealer refused. Investigation revealed the truck had been in two severe accidents, one a roll-over. The air bags had popped.
At the news conference, Fuentes showed the press the problems with the truck. ABC News' video on Fuentes discussing the problems with the truck is here.
Just what does the dealer keep for itself? Altogether, those items make up the Deal File, sometimes called the Deal Jacket. It contains internal documents that reflect the transaction, parts of which consumers never get to see. The file might include things like the credit application, a four-square page or other paper trail of promises, the ‘recap sheet’ or sales summary, vehicle invoice, finance papers, DMV information, repair history, inspections, trade-in calculations and separate agreements relating to after-market items. Even the front of this folder may have handwritten notes or other key information. Last but not least, the Deal File reveals how much profit was made on the transaction.
Fraud, if there is any, is likely to show up here. An experienced lawyer can peel back layers of deception by doing the math, applying intuition and noticing numbers that do not add up. It is sometimes shocking. Clearly car dealers are entitled to make a profit – that’s what they are in business to do. Yet, the Deal File can disclose profit centers that have nothing to do with the car it self, like a “theft protection” product that costs $37 and is rolled into the vehicle price at $1,400, or a service contract that costs the dealer $250 and is charged to the buyer at $2,500. At some point it becomes unconscionable. We even see instances where the Deal File shows a finance department is cheating its own sales personnel out of commissions just by moving extras from one line item to another.
When I started practicing consumer law in the 1980s, it was hard to get these internal documents. The defendants first denied they existed, and then cited bogus privacy concerns. Now we obtain this essential evidence routinely in the discovery process.
Last month, the California Court of Appeals issued a decision in a case called Lewis v Robinson Ford Sales, Inc. using evidence of the Deal Files to certify a class action for violation of the Rees Levering Act, an important California Truth-in-Lending law. At first the appellate court was going to leave the decision unpublished. We, and a number of other consumer advocates, urged the court to publish the case. The court agreed. Among other things, the case clarifies the evidentiary value of “Deal Files” as standard documents in the automotive industry and recognizes that vehicle transactions “can be evaluated through the deal jacket” for violation of consumer protection laws.
In discovery in one of our class actions against a U.S. auto manufacturer, we obtained a copy of an internal memo that illustrates this development. The author made reference to an Internet forum on the particular truck model in question and then commented, "We can't lie to consumers anymore."
Some of the leading forums are automotiveforums.com, automotive.com, edmund.com/insideline, and rv.net. To find a forum specific to your model vehicle, just search using your model vehicle and the word forum. There seems to be a forum for every make and model vehicle.
]]>The Times also lists two sites that cover fuel economy. fueleconomy.gov is a site run by the EPA that has a tool to compute miles per gallon which you may compare with other cars. Cleanmpg.com has tips on how to maximum your fuel economy.
]]>California had foolishly refused to join NMVTIS saying is own computer system had to be updated first. Now, thanks to excellent lobbying by consumer advocate Rosemary Shahan of the non-profit group Consumers for Auto Reliability and Safety, DMV has finally done the right thing. Rosemary reports that DMV will let a contract to Carfax.com or AutoCheck.com (an Experian company) to make the data accessible to consumers over the Internet. This development is truly a great advance in providing vital data to consumers shopping for used cars and trucks.
]]>The problem was that military personnel stuck with a lemon vehicle were not exactly free to go to their home state where they bought their vehicle to hire an attorney and prosecute a lemon law case. State Senator Ellen Corbett carried the bill that will become effective January 1, 2008. The bill was sponsored by Rosemary Shahan of the non-profit advocate group, CARS.
For more information on the background on this new law, go to CARS' website.
]]>When the car stops, the owner has to back down the hill, drive around for a while to charge up the battery, and then make the run back up the hill. At times, she had to park the car and walk home.
The Honda dealer looked at the car three times, but gave up trying to fix the car because there is no fix.
Channel 7 ABC News consumer reporter Michael Finney took a ride with the owner. Here is his report.
After filing the lawsuit, Honda to refund the owner all her money and take back the car.
The Settlement Class Notice was mailed on or about June 20, 2007. A copy of the notice appears here.
This notice reflects settlement of only part of the case, involving the failure to disclose itemization of gross capitalized cost in auto leases. The remaining lawsuit, which concerns false advertising as well as deceptive lease documentation, is scheduled to go to trial on August 13, 2007, against the non-settling defendants. These include AutoWest Dodge in Freemont, California, and its parent AutoNation, Inc. with headquarters in Ft. Lauderdale, Florida. After Wells Fargo settled, the San Franciso court granted plaintiffs class certification as to the non-settling defendants. There are approximately 750 members of the class.
]]>The 3 Series cars come equipped with Bridgestone run-flat tires, which are designed to enable drivers to continue driving a limited number of miles with a punctured tire. The problem is that the tires wear unevenly and prematurely. Many BMW owners are having to replace the tires in less than 10,000 or 20,000 miles.
In January 2007, BMW informed its dealers that owners with worn and rough-riding run-flats who had driven less than 10,000 miles were eligible for free tires and labor. Owners with 10,000 to 20,000 miles on the odometer were eligible for a 50% discount on the tires and labor. 
The class action alleges BMW's advice to its dealers concerning free or discounted tires is a "secret warranty;" "secret" because BMW failed to provide all BMW owners with notice of the warranty's existence as required by California's secret warranty law. The complaint seeks a court order requiring BMW to inform all California owners and lessees of the existence of the warranty and to provide a means of reimbursing owners who went out-of-pocket for replacement tires who otherwise would have received the benefit of the secret warranty.
The suit also alleges that BMW violated the California lemon law by selecting these defective tires for the 3 series cars and that consequently owners and lessees are entitled to damages.
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In one case, a mother co-signed a loan on a used Mercedes for her 25 year-old son, who lacked credit of his own. The mother never drove the car. Time passed and the son married. Marriage did nothing for his mechanical abilities and he failed to maintain the car. The brakes went out and in the crash that followed, a pedestrian was pinned between the Mercedes and some machinery. The injured man sued the mother, who was found liable as an owner of the vehicle. She was undoubtedly surprised to learn that in California there is a non-delegable duty to maintain the brakes on one’s car, and her “mere” co-signer status did nothing to distance her from that duty.
Then there are the loan payments. The co-signer has given her good credit standing to obtain the loan, and the lender has relied on that credit in support of the borrower’s ability to repay. The problem few people consider is that if the borrower had the ability to repay, there would be no need for a co-signer in the first place. What does the co-signer know about the friend or relative that the finance company does not? Love may be blind, but banks are not. The co-signer need to give serious thought to whether this is in fact an unaffordable loan. Often it is a better idea to lower the borrower’s sights -- perhaps it would be better to wait a month to save enough cash for a larger down payment and reduced monthly payments, or maybe a used car would do just for now. At the very minimum, every co-signer should take a calculator along and do the math. If the primary borrower is unable to pay, would the co-signer be able to cover the payment in order to protect his or her own good credit?
And what about notification of a failure to pay? If the buyer and co-signer do not share a mailbox, the latter may not even know of a default in time to fix the problem. The co-signer should think it through: “This is a 5 year loan. Where will I be in the next five years? Could my own employment or credit needs change? Is the borrower for whom I’m signing likely to be able to pay this amount throughout the whole term? Who is covering the insurance? And how will I know if circumstances change?”
Too often, a co-signer first learns of a problem is when she gets a Notice of Delinquency personally served, sent certified or sometimes delivered by first class mail. In California, the co-signer must get such notice at his or her own separate address, even if the monthly statements go only to the primary borrower. The absence of separate notice gives the cosigner separate rights. By the time the co-signer gets wind of a default or repossession, it may not be too late to recover the car with penalties, but the smudge on one’s credit report is a nasty stain.
Just about the only time co-signing might be wise is when a parent is assisting a teenager (who lives at home, has a known driving record and is covered by the family policy) in the purchase of a first car. The parents and child should discuss who will take care of maintenance, including tires, brakes, oil and routine check-ups. The term of the loan should not be longer than the child’s anticipated dependency – usually up to age 18 plus college. The parents should pay or supervise payment of the loan to ensure timeliness and accuracy to establish good credit. This way, the co-signer can stay on top of the loan payments, insurance and maintenance of the vehicle, while the child begins to build a valuable credit record.
We see too many instances in which there was some emotional pressure at the time of the co-signing. A single mother pressured by an alcoholic adult son; a boyfriend and girlfriend confusing money with love; a lonely (often elderly) relative wanting to feel needed. Too late, the co-signer realizes that either the optimism or the affection was sorely misplaced. There was a good reason the bank just wanted a second name on the signature line. And the trust, like the credit, comes up a little short.
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