INTRODUCTION

Volkswagen Executives Have Started Hiring Criminal Defense Lawyers

There are little things that can tell you that the proverbial scheisse is about to hit the fan. One of those is when you cheat on emissions and executives start resigning. A much bigger one is when everyone starts hiring criminal defense lawyers, as Bloomberg reports:

Dozens of Volkswagen Group executives in Germany have hired U.S. criminal defense lawyers as the Justice Department ramps up meetings with managers to gather evidence that may lead to charges, people familiar with the matter said.

… As dire as that may seem for the VW executives, they do have one annoying ace up their sleeves – as Bloomberg notes, Germany’s constitution doesn’t allow the extradition of its citizens outside the European Union. (Michael Ballaban, December 5, 2016, Jalopnik.com)

Slippery Slope

In August of 2009, after ruptured airbag inflators in Honda vehicles were linked to at least four injuries and a death, the automaker quietly requested a design change and did not notify U.S. regulators…. The previously undisclosed redesign could make Honda and Takata more vulnerable in more than 100 pending federal lawsuits and dozens more state suits. The request shows that Honda understood the safety risks posed by the inflators long before it started expanding recalls by the millions in 2014, the attorneys and law professors said. (Paul Lienert and Jessica Dye, Automotive News, March 24, 2016)

What You Don’t Know Can Hurt You

No wonder car owners in Canada are suffering from “recall fatigue:” From 2000 to 2016 exploding Takata airbags used by 18 automakers that can rupture and spray metal shards at passengers have resulted in eleven deaths in the U.S. (fortunately none reported in Canada). Over 28 million inflators have been recalled in the U.S. and Canada; replacing another 60 million air bags won’t be completed before 2019. Over 30 million GM cars were recalled to replace ignition switches that can shut off the vehicle on the road. Jeeps from 2007 to 2015 can suddenly stall out, lose power steering and brakes, and disable their airbags. All these formerly hidden dangers made 2014 to 2016 a record period for safety-related recalls, not due so much to assembly line mistakes, but as a consequence of factory cost-cutting run wild and widespread remediation to correct corporate cover-ups. Furthermore, 20% of the affected vehicles may never get fixed because owners can’t be found, or they have lost interest.
GM’s recall could have happened a lot sooner if the company had replaced its ignition switches about ten years ago when first alerted to the defect. The payout would have been $37.7 million, according to confidential General Motors documents released by the U.S. Congress. The cheaper $14.2 million repair that GM authorized saved the company $23.5 million – a savings that has ballooned into a cost of almost $5 billion.
Automakers will sometimes continue manufacturing a vehicle that is potentially defective because it costs less to stonewall complaints and pay off victims than to make a safer vehicle. Consumer advocates learned this lesson many years ago after reading the court transcripts in Grimshaw v. Ford (fire-prone Pintos) from 1981. Reporter Anthony Prince wrote the following assessment of Ford’s indifference in an article titled “Lessons of the Ford/Firestone Scandal: Profit Motive Turns Consumers into Road Kill,” People’s Tribune (Online Edition), Vol. 26, No. 11, November 2000:

Rejecting safety designs costing between only $1.80 and $15.30 per Pinto, Ford had calculated the damages it would likely pay in wrongful death and injury cases and pocketed the difference. In a cold and calculating “costs/benefits” analysis, Ford projected that the Pinto would probably cause 180 burn deaths, 180 serious burn injuries, [and] 2,100 burned vehicles each year. Also, Ford estimated civil suits of $200,000 per death, $67,000 per injury, [and] $700 per vehicle for a grand total of $49.5 million. The costs for installing safety features would cost approximately $137 million per year. As a result, the Pinto became a moving target, its unguarded fuel tank subject to rupture by exposed differential bolts shoved into it by rear-end collisions at speeds of as little as 21 miles per hour [34 km/h]. Spewing gasoline into the passenger compartment, the car and its passengers became engulfed in a raging inferno.

Carmakers lobby for “zombie” consumer protection laws (neither dead nor alive), set up “secret” warranties, hide behind bankruptcy filings, and slap gag orders on settlements. Often, progress on vehicle emissions and safety is the result of successful lawsuits and government initiative, with Washington and California leading the way, while Transport Canada (vehicle safety), Canada’s Competition Tribunal (misleading advertising), Environment Canada (emissions recalls), and Energy and Natural Resources Canada (fictional fuel economy ratings) exhibit a determined passivity. When it comes to auto regulations, Ottawa often seems more comfortable singing “Kumbaya” with the carmakers than being perceived as a cop on the beat.

SHHHH…More Secret Car Warranties

Automobile manufacturers use secret warranties or “special policies” to compensate car owners for performance-related defects long after the original warranty has expired, sometimes up to ten years. These extensions of the standard warranty are often found in confidential Technical Service Bulletins (TSB) sent to dealers, but seldom seen by car owners.
Part Four has dozens of special policies, warranty extensions and secret warranties that will pay for the repair or replacement of defective parts, including engines, transmissions, catalytic converters, brakes, and computer modules, even if you bought your vehicle used. Look at the following little-known warranty extensions that will pay for large repair bills up to 13 years out.

General Motors

2005-07 SUVs with defective fuel level sensors will have the part replaced for free up to 10 years or 120,000 miles. Previous repair costs will be refunded. Affected models are 2005-06 Chevrolet SSR, Trailblazer EXT, GMC Envoy XL; and the 2005-07 Buick Rainier, Chevrolet Trailblazer, and GMC Envoy. Cite GM Campaign #10054E.

Honda

2006-09 Civic engines may have a cracked engine block. This warranty extension will pay for a new engine block. If the engine is “cooked” from overheating, the entire engine will be replaced, gratis.

2006-11 Civics with cracked or chalking paint on the hood, roof, trunk, or front fenders will be repainted at no charge up to seven years. Cite Honda Campaign #12-049. Nissan

2002-05 Altima and Maxima models benefit from a recall that pays for new bushings and seals, plus the complete replacement of the lower suspension assembly, all affected by premature corrosion. There is no mileage limit under Campaign #P5216.

Let’s take a closer look at the car industry and give you the low-down on the many new and used vehicles on the market.