CarMax – Too Risky for Wise Investors?

Thinking of investing in CarMax? You may want to take a close look at their breathtakingly risky practice of selling unsafe, recalled cars to consumers.

CarMax is already under fire from consumer groups,  faces potential action by the Federal Trade Commission, and has been repeatedly exposed in undercover investigations by TV news organizations, including ABC’s 20/20, over its sales of unsafe, recalled cars to consumers.

Here’s the rub:  CarMax advertises that all their cars must pass a “rigorous 125+ point inspection” before they can be sold as “CarMax Quality Certified” cars.  But how can a car with a killer defect possibly pass a rigorous inspection and meet their standards?

Despite the mounting scrutiny, CarMax recklessly persists in selling “CarMax Quality Certified” unsafe, recalled cars at retail to consumers. Case in point:  Even when competitors like AutoNation have wisely announced their decision to cease selling used cars with unrepaired Takata air bags, CarMax continues to sell them anyway.

Defying common sense and responsible business practices, CarMax somehow seems unable to bring itself to stop selling consumers cars with the notoriously defective air bags, which can explode on impact, hurling shrapnel at the driver and front-seat passenger’s face and neck..  In cases that are making global headlines, the defective air bags have caused  serious injuries, including blindness, while other hapless victims have bled to death.

This particular defect  remains the focus of Congressional investigations in the U.S. Senate and House of Representatives. Takata also faces possible legal action by the National Highway Traffic Safety Administration, and by the US Department of Justice.

So — what does AutoNation know and take into account that CarMax doesn’t seem to grasp?

Is CarMax waiting for a total PR catastrophe, before they stop making that added bit of profit by selling lots of unsafe, defective, recalled cars to consumers, instead of having them repaired or selling them for a somewhat lower price, at wholesale?

Whatever CarMax’s motivation, wise investors may wish to rethink the company’s self-inflicted level of exposure.

 

CarMax sells unsafe, recalled cars

CARS continues to hear from more consumers who bought cars from CarMax, believing that they were safe. They were astonished and dismayed to find out that their car or truck was so unsafe, it was being recalled by the manufacturer due to safety defects.

One consumer in Richmond, VA called to say that he bought a GM car from CarMax, which advertises that all its cars must pass a rigorous “125+-point inspection” and be “CarMax Quality Certified” to be offered for sale. Then he found it that GM had recalled it because of the notorious ignition switch defect, which causes the car to die in traffic without warning, and also disables the power steering, power brakes, and air bag. A local GM dealer told him that it could take months before repair parts are available.

CarMax told him that was his problem, not theirs.

Meanwhile, he is afraid to drive the car. So he and his partner have a very expensive lawn ornament in their back yard.

Did CarMax sell you an unsafe, recalled car? Here’s what you can do:

1. Contact CARS. We want to hear your story. The only way we’re going to get CarMax to stop selling unsafe, recalled cars is for enough consumers whose lives are being put at risk, to speak up.

Contact CARS

2. File a complaint with the Federal Trade Commission. The FTC has the authority to crack down on CarMax over its false, misleading advertising, that claims its cars are so safe, they passed a 125+-point inspection. But — CarMax does not even check for safety recalls.

Complain to the FTC

 

 

Honda: “Oh, and by the way, this Honda’s air bags may explode in your face”

In case you thought that other auto manufacturers were smarter than GM, or at least capable of learning from GM’s mistakes, here’s a reality check:

Honda is now specifically allowing its dealers to sell unsafe, recalled used cars with faulty air bags that are prone to spewing metal fragments that become sometimes-lethal projectiles — as long as they get the used car buyer’s signature on a written “disclosure”  — which the dealer can hide in a stack of documents and slip in AFTER you have already agreed to buy the car, settled on a price, and spent 4 hours at the dealership.

Safety Research and Strategies writes about why cars equipped with  these defective air bags are finally being recalled — because of horrific incidents like these:

“In May 2009, 18-year-old Ashley Nicole Parham.of Oklahoma died in a 2001 Honda Accord, after her vehicle [collided with] another car in the school parking lot, tripping an explosion that sent a piece of metal right into her carotid artery.

In 2010, Kristy Williams, a Georgia college student, was stopped at a light, when her airbags deployed, expelling metal shards, which severed her neck and carotid artery and required two weeks in intensive care. Williams’ case against Honda was settled for an undisclosed sum.

On Christmas Eve, Guddi Rathore was at the wheel of her 2001 Honda Accord, when a U.S. postal service truck pulled out in front of her. The minor fender bender caused the airbag to explode. The metal shards severed the arteries in her neck, killing Rathore in front of her three young children, also occupants in the Accord.”

One of the complaints SRS documents, that was filed with the National Highway Traffic Safety Administration:

“Oncoming driver crossed center line making a left turn in front of Honda driver. Honda struck passenger side of turning vehicle. Both driver and passenger side airbags deployed. However, the diver side airbag inflator ruptured and propelled a one-inch piece of shrapnel into the driver’s right eye. Loss of sight and severe lacerations to nose requiring 100 stitches.”

Even if those disclosures would pass legal muster — and some legal experts think they may be worse than no disclosure at all — what sort of car dealer would deliberately sell their customers a car with an air bag that may explode in their face and blind or kill them?

Read more:

Automotive News: Honda pushes dealers for buyer’s signatures on air bag liability

Safety Research and Strategies: NHTSA finally gets curious about exploding air bags

 

 

 

 

 

 

 

 

 

 

 

CarMax sells recalled used cars

Auto retailing giant CarMax advertises that all of its cars have to pass a rigorous, 125+ point inspection before they are fit to sell. But ever wonder if that inspection includes safety recalls?

Huh?  How could a car pass CarMax’s rigorous inspection and still have a major safety defect that makes it so unsafe, it would be a violation of federal law for it to be sold as a “new” car?

Wellll…  that’s a very good question.

Keep in mind — CarMax recently played a major role in killing first-in-the-nation legislation in California that was backed by consumer and safety organizations, to make it illegal for car dealers to sell recalled used cars to consumers.  Their excuse?  They are not authorized to perform safety recall repairs.

That’s right. Auto manufacturers don’t allow independent dealers like CarMax to perform safety recalls because under federal law, the manufacturers are responsible for ensuring that the recall repairs are done properly.  Which makes sense, since the manufacturer is the one that made the defective product, issues the recall, and oversees the repairs.  Ultimately, if the safety recall repair is inadequate, or isn’t performed properly, and someone is killed or injured as a result, the manufacturer is the one who is held liable. Witness what’s going on with GM.

So watch out. CarMax thinks it’s OK to sell unsafe, recalled used cars to consumers simply because they’re not authorized by auto manufacturers to perform safety recall repairs. Seriously.

See for yourself. Here’s the testimony of CarMax’s Counsel against the California auto safety recall bill:

CarMax:  Don’t make us stop selling unsafe, recalled used cars

Bottom line:  Don’t get snookered by those CarMax ads claiming that all their cars are “CarMax Quality Certified” and passed a “125+ point” inspection.  Unless you don’t mind the fact it could be a certified 125+ point deathtrap.

Did CarMax sell you a recalled used car? CARS wants to hear your story. Here’s how to get in touch:

Contact CARS

P.S. Even if you think your CarMax car is safe, it’s a good idea to check the manufacturer’s website for safety recalls, and enter in your car’s Vehicle Identification Number (VIN).

GM issues safety recall over faulty ignition switches

General Motors is recalling nearly 780,000 compact cars in the US and Canada due to a faulty ignition switch. The switch can make the engine shut off without warning, causing a crash. The recalled vehicles are 2005 – 2007 Chevrolet Cobalts and 2007 Pontiac G-5s.

GM has acknowledged that 6 people have died in 22 crashes, linked to the problem.

Even something as simple as riding on rough roads or having other keys on the key ring can trigger the ignition switch to move out of the “run” position, cutting off both the engine and electrical power.

As required under federal law, GM will replace the ignition switches for free, through their franchised car dealers. However, it remains to be seen when the dealers will obtain sufficient parts to perform the safety recall repairs.

Meanwhile, GM is urging owners of the recalled vehicles to remove other items from the key rings for the ignition keys, pending repairs.

NOTE: If you are shopping for a used car, NEVER trust the dealer to ensure that the safety recall repairs have been performed. Dealers keep being caught selling unsafe, recalled vehicles to consumers — including so-called “certified” used cars.

Plus — dealers are actively opposing legislation in Washington, DC and in California that would prohibit them from renting, selling, leasing, or loaning unsafe, recalled vehicles to consumers, unless the safety recall repairs have been performed first.

CARS’ tips on how to buy a safe, reliable used car — without having to risk going to a dealer:

Top 12 used car buying tips

Dealers playing “used car roulette” with customers’ lives — and opposing legislation to make them stop

Did a dealer sell you an unsafe, recalled car?  We want to hear your story.  Contact CARS

 

 

 

 

Honda announces new safety recall of popular Odyssey and Acura models

Honda announced it’s recalling 318,000 Odyssey minivans in the U.S. and 63,400 Acura MDX sport-utility vehicles in several nations because the air bags could deploy unnecessarily, due to electrical interference with a computer chip.

Honda acknowledged it had received complaints from owners of 2003 and 2004 model year Odyssey minivans and 2003 Acura MDX sport-utility vehicles, after the air bags popped open while they were just driving along.

Honda said that owners of the recalled vehicles should take them to Honda dealers, where technicians will install an “electrical noise filter.”

Caution:  If you are shopping for a used car, you cannot rely on the dealer to ensure that the safety recall repairs have been performed.  Auto dealers are actively opposing legislation that would require them to fix unsafe, recalled vehicles prior to renting, selling, or loaning them to unsuspecting consumers.

Read more: Dealers play unsafe, recalled used car roulette

 

 

US Senators Schumer, Murkowski, Boxer, and McCaskill introduce bill to ban rental car companies from renting recalled vehicles to consumers

LEGISLATION TO RECEIVE HEARING FOR FIRST TIME

A Bipartisan Group of Senators Introduces Raechel and Jacqueline Houck Safe Rental Car Act of 2013 That Would Close A Dangerous Loophole That Allows Rental Car Companies To Rent Or Sell Recalled Vehicles That Are Unlawful for Car Dealers to Sell

Legislation is Named for California Girls Killed When Recalled Rental Car Caught Fire and Has Support of Rental Car Industry – Bill to Receive Hearing in Commerce Subcommittee For the First Time

Senators: Keeping Defective and Potentially Dangerous Cars Off the Road Is a Matter of Life and Death

Today, U.S. Senators Charles E. Schumer (D-NY), Lisa Murkowski (R-AK), Barbara Boxer (D-CA), and Claire McCaskill (D-MO) introduced legislation that would ban car rental companies from allowing consumers to rent or sell vehicles that are under manufacturer recall. The Raechel and Jacqueline Houck Safe Rental Car Act of 2013 is supported by all the major car rental companies – Hertz, Enterprise, Avis Budget, Dollar Thrifty, and National – as well as the American Car Rental Association – together representing virtually 100 percent of the rental car market.

While current law prohibits car dealerships from selling recalled vehicles to consumers, no law bans rental car companies from doing the same or renting them to unsuspecting consumers. The Raechel and Jacqueline Houck Safe Rental Car Act of 2013 would keep unsafe rental cars that have been recalled off the road. Later this month, Senator Claire McCaskill, the Chair of the Senate Commerce Committee, Consumer Protection Subcommittee, intends to hold a hearing on the bill.

“Rental car companies are rolling the dice with passengers’ lives each and every time they rent a car that’s under a recall,” said Senator Schumer. “This practice has already proved tragic. Most rental companies have now changed their policies, but we need a law to ensure that recalled cars are never again driven off of rental lots. This bipartisan bill is a common sense safety measure, and I’m very grateful that Senator McCaskill has agreed to hold a hearing on it.”

“This legislation honors the memory of Raechel and Jacqueline Houck – two beautiful girls who lost their lives in a senseless tragedy – by ensuring that no other family will have to fear that the rental car they are driving is unsafe,” said Senator Boxer. “Because of the tireless work of their mother, Cally, we are able to introduce this bipartisan bill today that will make sure that vehicles rented or sold by rental car companies are safe and sound.”

“Our goals for this legislation are twofold—to protect families, and to prevent undue burdens for employers—and this agreement succeeds on both fronts,” said McCaskill, Chairman of the Senate Subcommittee on Consumer Protection, which will hold a hearing on the legislation later this month. “Neither side got everything they wanted, but by everybody giving a little, we’re getting a lot—and that’s what compromise is all about.”

“No other family should have to endure such horrific losses just because a rental car company didn’t bother to ensure that their cars are not being recalled due to safety defects,” said Cally Houck, the mother of Raechel and Jacqueline Houck.

Rosemary Shahan, President of Consumers for Auto Reliability and Safety added, “We’re optimistic that Congress will act to stop all rental car companies from playing ‘rental car roulette’ with their customers’ lives.”

In 2004, sisters Raechel and Jacqueline Houck were killed driving a rental car that had been recalled for a power steering hose defect but had not been repaired. The car caught fire because of the defect while traveling on the highway, causing a loss of steering and a head-on collision with a semi-trailer truck. The young women died in the crash. The Raechel and Jacqueline Houck Safe Rental Car Act of 2013 is needed to ensure this tragedy is not repeated.

Getting unsafe vehicles off the road is integral to improving safety and saving lives. This is why current law requires manufacturers to recall vehicles that have safety-related defects or do not meet federal safety standards. Current law also prohibits auto dealers from selling a new car under recall unless the defect has been remedied. The Raechel and Jacqueline Houck Safe Rental Car Act of 2013 would, for the first time, hold rental companies to the same standard as auto dealers. Specifically, the bill:

· Prohibits Rental or Sale of Vehicles Subject to a Safety Recall. Under the senators’ plan, vehicles may not be rented or sold until the vehicles are fixed, consistent with existing law for new car dealers, who have been prohibited from selling or leasing recalled vehicles for decades. Rental companies would be permitted to sell a damaged vehicle subject to recall for parts or scrap with a junk title.

· Requires Rental Companies to Ground Vehicles Under a Safety Recall. The bill would ensure that vehicles under a safety recall will be grounded as soon as possible but no later than 24 hours after the rental company gets the safety recall notice. Rental companies will have up to 48 hours for recalls that include more than 5,000 vehicles in their fleet.

· Permits Rental Companies to Rely on Temporary Measures Identified by Manufacturers. If a manufacturer’s recall notice specifies steps that can be taken to eliminate the safety risk until parts are available, a rental company may continue to rent the vehicle if those measures are put in place but must ground and repair the vehicle once parts become available.

· Ensures NHTSA Has Tools Necessary to Protect Consumers. The National Highway Traffic Safety Administration will have authority to investigate and police rental companies’ recall safety practices.

The Raechel and Jacqueline Houck Safe Rental Car Act of 2013 is supported by Carol (Cally) Houck – mother of Raechel and Jacqueline Houck, Consumers for Auto Reliability and Safety, Advocates for Highway and Auto Safety, Center for Auto Safety, Consumers Union, Consumer Federation of America, Consumer Action, National Association of Consumer Advocates, and Trauma Foundation.

The bill has been endorsed by all the major car rental companies – Hertz, Enterprise, Avis Budget, Dollar Thrifty, and National – as well as the American Car Rental Association. The bill also is supported by the Truck Renting and Leasing Association, representing the vast majority of truck renting and leasing operations in the United States, as well as AAA and State Farm.

Enterprise

“Although most of the car rental industry already prohibits renting or selling recalled cars if they haven’t been repaired, lawmakers can further reassure car rental customers across the board by supporting and voting in favor of this important federal legislation. As a result, we will continue advocating on behalf of this bill and working diligently with consumer advocates, the American Car Rental Association and other key stakeholders to help get it passed.”

The American Car Rental Association

“The American Car Rental Association (ACRA) is pleased to join with consumer advocates in support of this legislation, which prohibits the rental of any vehicle that has an unrepaired safety recall and addresses certain practical implementation issues of our industry. It is critically important that Congress codify what most of the car rental industry voluntarily enacted last year. By formally creating a uniform standard, both car-rental and car-sharing customers will have even greater confidence going forward no matter where they rent their vehicles.”

Hertz

“Hertz supports efforts to prohibit car rental companies from renting or selling recalled cars if they haven’t been repaired. The major companies do an excellent job handling recalls, and consumers should have confidence that the cars they drive are safe; this legislation will help improve the public’s perception of our industry’s commitment to safety.”

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Unsafe, Recalled Used Cars for Sale on Dealer Lots

Used car dealers across the nation persist in foisting off unsafe, recalled vehicles on an unsuspecting public. Motor vehicles rank among the most hazardous consumer products in the nation, in terms of fatalities, serious and debilitating injuries, and economic costs to our country.

Fortunately, car dealers are prohibited by federal law from selling or leasing NEW cars that are being recalled by the manufacturer. But unfortunately, there is no such law to protect USED car buyers.

Each year, about 40 million people purchase used cars. But the powerful auto dealer lobby — which received billions of taxpayer dollars during the Great Recession — has blocked attempts in Congress to protect used car buyers from unsafe, defective recalled cars being sold at dealerships.

News organizations have repeatedly identified this problem. In 2010, the non-partisan U.S. Government Accountability Office (GAO) recommended that Congress address the threat posed by unsafe, recalled used cars. But so far, Congress has failed to act. Auto dealers are not even required to report fatal or injury crashes involving recalled vehicles they sell to the public, to the National Highway Traffic Safety Administration.

CBS’ Early Show investigated sales of recalled, used cars and found unfixed, recalled cars on lots scattered across the country.  When they asked if the cars were being recalled, sales personnel assured them that they wouldn’t have them for sale if they were being recalled. If only that were true.

According to CBS’ Early Show: “A dealer in Oklahoma sold Tabitha Gordon a used Durango in 2009. She was driving with her son, Kaden, when the lights, wipers and locks went haywire.  Gordon said of the incident, “I felt like I was in a twilight zone. … The plastic that covers the speedometer had popped, and smoke started billowing into the vehicle.”

She managed to pull over and get Kaden out as the car caught on fire. [“Early Show” Consumer Correspondent Susan] Koeppen said it turns out Gordon was sold a car that had been recalled for an electrical defect.  “We were told that it was safe and it would be a safe vehicle for our family,” Gordon said. “And it wasn’t, it was far from it.

Watch video: CBS Early Show — Recalled Used Cars Up For Sale

Can you imagine how awful it would be, for your car to catch on fire, when you have your child strapped in a child safety seat in the back? What if you are driving with several children who are strapped in? Would you be able to get all of them out in time, before the car explodes?

Auto dealers complain that it’s too much bother for them to find out if a car is being recalled and get it fixed, before offering it for sale. They would rather risk your life, and your family’s safety, than take the time to call the manufacturer’s toll free number and check the car’s status, or visit the manufacturer’s website, online, and get the car fixed — for free.

CARS believes that even if you can’t afford a new car, or if you simply decide that a used car is a better deal, you and your family still deserve to be safe.

What can you to to protect yourself from unsafe, recalled used cars?  When you find a car you like,  NEVER take the car dealer’s word for it that the car does not have a safety recall pending.  As reporters have repeatedly documented, car dealers are prone to lying about safety recalls, even if you ask them face-to-face about a specific car.

Instead, BEFORE you buy, do your own research.  Note the Vehicle Identification Number (VIN), which is stamped on a small plate on the dashboard, visible through the windshield. Call the auto manufacturer’s toll-free number and ask if all the recall work has already been done. Or check the auto manufacturer’s website, under “safety recalls,” and enter the VIN.  You can also contact a local dealership that sells that make of vehicle, and ask them to double-check for you. Since new car dealers get paid to do recall repairs on makes they sell, at least they have some incentive to tell you the truth.

Read More: CARS tips for used car buyers

 

 

 

 

 

Buyer Beware: Auto dealers selling unsafe, recalled cars — without fixing them first

One of the reasons many car buyers purchase used cars from an auto dealer is to get a car that they think is safer. But are they really safe? Not necessarily. Each year, millions of used cars are sold, without the safety recall work being done. Many are being sold by so-called “reputable” auto dealers.

The harsh reality — dealers are prohibited from selling NEW cars that are under a safety recall, but are exploiting a loophole in federal law that allows them to sell USED cars that are under a safety recall, without fixing them first.

Their excuse? They don’t want to bother to take them out of service as loaner cars, or to another dealer, for FREE repairs. After all, that might cut into their profits or be inconvenient.

Never mind the fact they are putting their customers’ lives in jeopardy. And also creating a hazard for other motorists who share the road with the unsafe, recalled cars. This excuse is especially lame, since the repairs are FREE.  By federal  law, the auto manufacturers must pay for the repairs, in full.

According to a report issued by the non-partisan Government Accountability Office, car dealers’ sales of unrepaired, recalled cars is a serious problem that urgently needs to be addressed.

In the wake of the Toyota recall scandal, and in reaction to the GAO report, Congress attempted to require auto dealers to fix recalled used cars before selling them to the public. But under pressure from the powerful auto dealer lobby, that provision was stripped from the national auto safety bill that finally passed.

Tragically, unsafe, recalled cars continue to put unsuspecting car buyers and their families at risk. One investigation by highly respected consumer reporter Joe Ducey, Channel 15 in Arizona found dozens of recalled cars for sale on the lots of major auto dealers:

Cars with unrepaired safety recall issues sold from Valley car lots

Don’t fall prey to this dangerous scam. Be aware you can’t rely on auto dealers not to sell or rent an unsafe, recalled car. In fact, the powerful auto dealer lobby is actively pushing in Congress to keep on putting their customers’ lives in jeopardy. So far, they have prevailed.

Were you sold an unsafe, recalled car by a dealer? If so, CARS wants to hear from you. The only way this reckless policy will stop is when people like you speak up and the truth gets out.

Contact CARS

Meanwhile, here are 11 top tips from CARS, for how to buy a safe, reliable used car — without even having to step foot on a car dealer’s lot:

How to buy a safe, reliable used car — without getting ripped off