Tesla, the demise of the car dealer, GM recall – where was NHTSA?

In an about face, and what Elon Musk would describe as a slap in the face, New Jersey Governor Chris Christie changed his mind about how a consumer can purchase a car in New Jersey.

Christie, according to a press release from Tesla’s CEO, Elon Musk, decided not to allow the consumer to make the final decision, by voting, but gave a one-line veto to Tesla selling cars in New Jersey. New Jersey is the third state in the United States to stand with the car dealers and against Tesla.

Franchise dealerships have been around for almost 100 years, families have handed down their car dealership and the land it sit’s on for generations. At one point car manufacturers started putting up their own “factory” dealerships. Those dealerships cut into the profit of the franchised dealers and hence the start of the coalition of car dealers to protect the sovereignty of their franchises.

But what happens when a new car manufacturer comes in without any car dealerships and doesn’t want to sell franchises? Isn’t it their right as a business to decide how they want to sell their product? This doesn’t just apply to Tesla, it could apply to any car manufacturer from China, India etc that wants to come in and set up shop quickly. Avoid the red tape of franchises and buy and old building and set up shop.

Is there a savings in the price of a car if the car dealership is owned by the factory instead of a business person who has to make money for him and his employees? Would car manufacturers sell at “invoice” instead of the Manufacturer Suggested Retail Price (MSRP)? Car dealers have been known to hike the price of a hot car up over MSRP to make more money.

Musk’s complaint wouldn’t have the legs it does if Christie didn’t benefit from it. Let’s face it, it takes a lot of money to run a campaign for Governor and for the Presidency of the United States. Car dealerships have traditionally spent a lot of their money in their own town/city, region, county and state. Just like you see every junior soccer team sponsored by a car dealer, you can also see every elected official sponsored by a car dealer, or the coalition of car dealerships.

Car dealerships are increasingly taking hit’s from both sides, the consumer and the car manufacturer. Consumers are buying more items online, including cars. At the same time car manufacturers are demanding more from their car dealerships/franchises. I was told by one Kia car dealer that in order to sell the highly priced K900 that Kia Motor America is commanding a bounty of $50,000 – just to have the right to sell the car – and $75,000 to teach their service people how to service the car, plus a week of the service person’s time.

If car manufacturers are squeezing the car franchised dealers out of the business and more people are purchasing online and don’t want to go to a dealership to buy a car, how long will it be before the car dealership model changes? How long before buying a car is more like buying an Apple computer? Does it depend on how much money is being paid to our politicians?

GM recall – Where was NHTSA?

General Motors Chief Executive Officer (CEO) Mary Barra is getting her first taste of what it is like to be on the hot seat. In the first quarter as CEO General Motors has come under fire, and criminal investigation for not recalling certain cars that resulted in deaths.

According to a General Motors spokesperson GM has now recalled 1.6 million cars. The cars in the recall are 2005-2007 Chevrolet Cobalt, 2007 Pontiac G5, 2003-2007 Saturn Ion, 2006-2007 Chevy HHR, 2006-2007 Pontiac Solstice and 2007 Saturn Sky vehicles.

The issue, according to GM, is that the ignition switch could go from “run” to “accessory” while being driven. It took GM way to long to fiz the problem and now General Motors has recalled all the above cars and will have to fix them and will have to pay retribution to families where their loved ones were injured or died, plus there could be criminal negligence.

Part of the problem is that none of the people in charge at General Motors are still working for General Motors. In fact, General Motors is no longer the General Motors that was in charge during those investigations. General Motors went through a bankruptcy so there will be questions as to how liable the new General Motors is.

But where was National Highway Traffic Safety Administration (NHTSA)? Just like GM’s Barra, the U.S. Transportation Secretary Anthony Foxx was not at the helm of NHTSA during those years, but where was Secretary Ray LaHood? Why didn’t NHTSA act more aggressively and demand a recall from General Motors?

In a Reuters article U.S. Transportation Secretary Anthony Foxx was quoted as saying, “The questions we are asking are whether there was a timeliness issue with GM’s bringing to our attention the issues regarding this ignition switch,” Foxx told a Senate panel.”

Excuse me Mr. Foxx, where was NHTSA? NHTSA is a federally budgeted entity whose only job is supposed to be the safety of consumers in all matters of driving. According to the New York Times there were 260 complaints over an 11 year period. I’ll give it to GM that they were going through a bankruptcy, but where was NHTSA? Why didn’t they demand GM do something as early as 2007?

Reuters also reported that the House and Senate committees have pledged to hold hearings about GM and NHTSA’s behavior. Will there be criminal liability for NHTSA as well? NHTSA is saying that a full-blown government investigation was not called for in the early years, but really, how can U.S. Transportation Secretary Anthony Foxx justify that statement? If the investigation had been done in 2007 by NHTSA General Motors wouldn’t be in the position they are now and lives wouldn’t have been lost. And lives wouldn’t have been lost.

Too often NHTSA has played politics instead of being the ombudsman for safety for this Nation of ours. Even today, NHTSA has not mandated back-up cameras as standard, an issue that was supposed to have happened years ago under LaHood but has not happened yet to date, even though NHTSA knows that two children every WEEK are killed by people driving over them while backing up.

Perhaps NHTSA should demand that car dealers report every single problem a consumer reports to them about a car to NHTSA. That way NHTSA would hear from an independent entity from the car manufacturer, but a group that is in direct contact with the consumer.

By | 2017-03-22T08:00:27+00:00 March 16th, 2014|Categories: Automobiles and Energy, GM, Podcasts, Radio, Tesla Motors, The John Batchelor show|Tags: , , , , , |0 Comments

About the Author:

Lou Ann Hammond is the CEO of Carlist and Driving the Nation. She is the co-host of Real Wheels Washington Post carchat every Friday morning and is the Automotive, energy correspondent for The John Batchelor Show and a Contributor to Automotive Electronics magazine headquartered in Korea. Hammond is a member of the North American Car and Truck of the Year (NACTOY), Women's World Car of the Year (WWCOTY), and the Concept Car of the Year.