Auto recalls and lemon cars: It’s still a case of buyer beware in Canada

You have to feel for Danielle Champagne, who’s living every car owner’s nightmare.

The Winnipeg mother paid top dollar for a new 2011 Chevrolet Cruze sedan but told CBC News it’s been nothing but trouble, apparently subject to 15 manufacturer’s safety recalls and another 15 warranty-related problems.

Canada has no U.S.-style lemon laws, which give owners the right to demand a refund or replacement vehicle if it’s suffering from chronic mechanical problems. Customers here have to go through an auto industry-sanctioned arbitration process to deal with complaints.

It’s not clear whether Champagne is involved in that process. She could not be reached and calls by Yahoo Canada News to the service manager at Vickar Community Chevrolet, which sold her the car for $34,000 (current base asking price for a Cruze is about $17,000), were not returned.

Champagne’s problems highlight the fact Canadian consumers are largely on their own when it comes to dealing with defective vehicles. Even if you exercise due diligence while shopping – researching price, performance and reliability – there’s no guarantee you won’t end up with a lemon, like Champagne apparently did.

The Cruze, produced at General Motors’ Lordstown, Ohio, plant, competes in the crowded compact sedan segment against the likes of Dodge Dart, Ford Focus, Honda Civic, Toyota Corolla and a host of others. It’s not a terrible car per se, says George Iny, president of the Montreal-based Automobile Protection Association (APA).

“But it is a bit of a junky car, unfortunately,” he said.

According to Transport Canada’s recall database, the Cruze actually has been subject to only seven recalls, not 15 as CBC News reported, including two involving the steering system and one for brakes. It’s possible the higher figure related to the number of visits Champagne had to make to deal with any one recall.

Seven is still a lot of recalls, said Iny, but added the Chevy hasn’t got a reputation of leaving owners stranded. The Cruze’s design is good, he said, but the problems most people report are common to other GM models, suggesting components are cheaply made.

New and used-car shoppers can check a model’s recall history on Transport Canada’s database.

Higher recall numbers can actually be a good thing. It means automakers are paying attention to potential safety-related defects, whether they’re tied to a car’s design or problems during production.

Related stories:

Transport Canada aware of deadly GM defect 8 months before recall

U.S. regulators recall 2.1 million vehicles in new air bag issue

Safety regulators probe Fiat Chrysler SUV recall fix in U.S.

Last year, 64 million cars were recalled in the United States, four times the number sold. In Canada, the figure was more than eight million on a record-shattering near-600 recall notices, against about 1.6 million sales, according to Transport Canada figures compiled by The Canadian Press.

“I would be more worried about the years where there’s only 300,000 cars recalled, which has happened in the past, because that suggests the companies are not being vigorous about it,” said Iny.

Industry’s recall vigilance up after series of scandals

After a string of scandals, the industry appears more vigilant in issuing recalls or technical service bulletins promptly, Sean Kane, president of Massachusetts-based Safety Research & Strategies Inc., said in an interview.

“There seems to be a lot more concern for dealing with safety matters sooner rather than later so that they’re not caught in a situation where there are going to be allegations that they delayed,” he said.

The high numbers are fallout from the auto industry’s sorry history of ignoring sometimes fatal flaws in their products.

In the early 1970s, Ford’s rush to get its Pinto economy car to market against surging Japanese competition led it to deliberately ignore a design mistake that left the gas tank vulnerable to being punctured and catching fire in the event of a rear-end collision.

Ford’s bean counters calculated it was cheaper to settle potential future death and injury claims than implement a redesign that would have added $11 to the price of each new Pinto. A string of deadly accidents, which reportedly claimed between 27 and 180 lives, not only cost Ford money but damaged its brand for years.

Toyota’s vaunted reputation for quality took a hit when problems arose in 2009-10 with some models that seemed to run away with their drivers, with sometimes deadly results. An investigation by U.S. regulators turned up no mechanical or electronic defect and the problem was blamed on misaligned floor mats or “pedal misapplication,” the technical term for drivers hitting the gas pedal instead of the brake. But Toyota was still called on the carpet and paid a US$1.2-billion penalty for how it handled the problem.

Perhaps the most notorious recent case involves GM’s apparent coverup of a defect in ignition switches on a number of models that caused the vehicles to turn off while being driven. At least a dozen U.S. deaths were attributed to the defect, which apparently was detected a decade before it came to public attention and a series of recalls were issued, affecting millions of GM cars worldwide.

The lessons from such debacles seem hard to absorb, said Iny.

“There was a bump after the Toyota issue played itself out,” he said. “Other companies did some housecleaning and then they all went back to their bad old habits.”

Automakers appear to be taking a fresh lesson from GM’s massive failure to jump on a problem when it first appears, said Iny.

“They reclassified files that they had closed; they reopened them,” he said. “This often meant recalls of vehicles going back many years, which is a sign of a company having acted post-facto long after they knew of a problem. For us this is a very positive development, a new sensitivity to issues.”

But old habits do die hard. Iny noted Fiat Chrysler Automobiles (FCA) recently persuaded the U.S. National Highway Traffic Safety Administration (NHTSA) to accept the installation of a non-functional trailer hitch on 1.5 million Jeep vehicles as a remedy to a design that left the fuel tank vulnerable in rear-end collisions, a la Ford Pinto.

“Cynical,” said Iny. “They negotiated with the government, they beat them up and said a trailer hitch is a safety barrier.”

“We call those the non-fix fixes or the Bandaid recalls,” Kane added. “Just because it’s recalled doesn’t mean it’s remedied.”

Family awarded $150 million after exploding Jeep kills young son

A Georgia civil jury last month awarded a couple US$150 million in damages after their four-year-old son burned to death when their Jeep was rear-ended.

One of the largest single recalls last year involved airbag-maker Takata Corp. after it was found front driver and passenger airbags sometimes exploded instead of inflating, resulting in injuries and death. Some 17 million vehicles made from 2002 through 2008 were affected worldwide.

Kane said this looks like another case where the defect was initially played down when it was first discovered.

“The first Takata recall for an airbag inflator problem was in 2008 and involved 3,900 cars. Thirty-nine hundred!” he said.

“We’re now up to in excess of 16 million for that same defect. You can’t tell me that back in 2008 that someone didn’t get the inkling that, jeez, we may want to look back and see what else we’ve got.”

But just because a recall’s been issued, doesn’t mean it will get done soon.
Recall compliance rates run between 60 and 65 per cent, said Iny.

“That means that one out of three recalled cars is never fixed,” he said. “That to me is the elephant in the room.”

Sometimes car owners don’t bother to read the recall notices they get, he said, but car makers also are not required to do more than send notices to the last owner’s last known address.

The surge in recalls of older cars has also created a problem of parts availability, with Takata airbags a prime example, said Kane.

“There’s estimations that it’s going to take two full years before the entire supply chain is up to speed with getting airbag inflators to all of those cars that are being recalled,” he said.

Both Kane and Iny said it’s up to regulators to keep automakers honest by enforcing compliance on recalls and pressing investigations of potential safety defects.

But NHTSA appears starved of funding despite increased recalls, said Kane.

“This new enforcement reality is going to be tamped down by the fact that NHTSA is drinking out of a fire hose,” he said. “So in the absence of increased funding, how much can they do on the enforcement side to improve what they’re looking at?”

That’s important to Canadians, added Iny, because Transport Canada’s auto safety arm leans on the work its American counterpart does.

Best ways for consumers to protect themselves

One of the best ways for consumers to protect themselves before pulling the trigger on a car purchase, or if they’ve already bought, is to find out if that individual vehicle has had any recall-related repairs properly completed by looking up its vehicle identification number (VIN).

Transport Canada offers links to many manufacturer’s web sites but U.S. NHTSA has a VIN search tool that allows direct searches.

Iny also recommends checking with a dealer of your preferred model because the databases flag only safety recalls.

“There may be some non-safety recalls that didn’t make it into that register, or there may be a software upgrade for that car that are no charge and might improve its performance,” he said.

When it comes to lemons, there are more resources than ever on the web to help car shoppers ferret out potential duds, including Consumer Reports, IntelliChoice and the APA.

Canadian new-car buyers have some protection via the voluntary Canadian Motor Vehicle Arbitration Plan (CAMVAP).

According to figures supplied by CAMVAP, the plan held 50 arbitration hearings last year, resulting in 13 vehicles worth $482,000 being bought back. It also reimbursed a handful of customers $3,190 for repairs. In the last 10 years, the number of cars bought back rarely went above the teens.

“The number of arbitrated cases do not tell the whole story as many consumers are able to settle with the manufacturer of their vehicle prior to reaching out to CAMVAP or after the application process has started but before a hearing is held,” general manager Stephen Moody said via email.

“For every application package sent to consumers whose vehicle qualifies for the program the ratio is two packages sent out to one claim initiated by the consumer. Most manufacturers work hard to resolve issues at this point in order to avoid compelling the consumer to go to CAMVAP and to try and keep the consumer as a customer.”

But Iny said without U.S.-style lemon laws, there’s little incentive for car makers to issue refunds or buy back troubled cars.

“In Canada they know there’s a much better chance that they’ll never have to take it back,” he said. “Very, very few people who use their arbitration program actually have the car replaced.”