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November 23, 2015

NADA counters Blumenthal's used car recall bill

The National Association of Automobile Dealers is out with a report that claims consumers would be significantly hurt if a law banning used cars with recalls from being sold is enacted. U.S. Sen. Richard Blumenthal’s proposal, the trade group claimed, could cost consumers anywhere from $1,210 to $5,713 per car.

Current federal law prohibits the sale of new cars under recall until they are repaired but does not require the same of used cars. In response, Blumenthal introduced a measure earlier this year prohibiting dealers from selling unrepaired recalled used cars.

The NADA said in a statement that requiring auto dealers to fix all outstanding safety recalls before selling or leasing any used passenger motor vehicle could have an adverse impact on the value of those trade-ins. “This trade-in allowance is an important part of the overall transaction because, typically, the consumer uses it to fund the down payment needed to finance the purchase or lease,” the NADA said.

According to government and industry data collected for the study, repair delays resulting from the challenges faced in engineering, producing, and distributing the replacement parts needed to address recalls are both real and significant. Also significant, the NADA says, is the fact that dealers will not know in advance how long a recall delay will last, and thus must estimate the delay, which could further exacerbate the trade-in value reductions that consumers will face.

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