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Enterprise discusses auto-recall policy with US regulators

By Rick Montgomery, McClatchy Newspapers –

KANSAS CITY, Mo. — You can rent a car today that is under a safety recall and not know it.

Cally Houck — whose two daughters died when such a car burned up on them — is determined to change that.

In her crosshairs is the industry giant, Enterprise Holdings, based in the St. Louis area. On Friday, Enterprise representatives met with car-safety advocates in Washington to discuss, for the first time, legislation that would ban the renting out of recalled vehicles that have not been fixed.

After years of resisting federal oversight of its practices, Enterprise last week blinked when an online petition campaign, waged by Houck, directed more than 130,000 emails to the company’s corporate headquarters. The petition drive ignited after the second-largest car rental company, Hertz, agreed to support legislation that would put recall oversight of the industry under the National Highway Traffic Safety Administration.

“We all sat down and heard each other out, but there’s still a huge, huge gulf” in negotiations, said Rosemary Shahan of the advocacy group Consumers for Auto Reliability and Safety, which brokered the agreement with Hertz.

“But at least we are talking,” she added.

Enterprise, which commands more than half of the rental-car market and owns the Alamo and National chains, issued no comment Friday. Competitor Avis Car Rental joined Enterprise in meeting with the auto-safety group.

At issue is the Raechel and Jacqueline Houck Safe Rental Car Act, co-sponsored by Democratic Sens. Charles Schumer of New York and Barbara Boxer of California. Likely to be attached this month to an omnibus spending bill for transportation, the measure would require car-rental companies to ground vehicles that are under federal safety recall and to repair problems before leasing or selling the vehicles.

Such a law has applied to new-car dealers since the 1960s.

Two years ago, a jury awarded $15 million to the Houck family of Santa Cruz, Calif., after Enterprise accepted responsibility for the sisters’ deaths. A Chrysler PT Cruiser they had rented in 2004 caught fire because of a power-steering defect that the manufacturer had identified weeks earlier, prompting a recall.

In a statement last week, Enterprise said, “today that vehicle would never be rented” because of safeguards the company put into place when determining which recalled vehicles were safe to drive.

But until Hertz agreed to support the Houck bill, Enterprise had publicly dismissed the need for federal oversight.

“In the past, we believed that this step was unnecessary,” the company said last week, “but a growing number of people, including our customers and business partners, clearly want more assurance on this critical issue. We hear them — and what we’ve heard has caused us to rethink our stance. …

“We share the Houck family’s goal of preventing anything like this from happening again.”

In a telephone interview Friday, Cally Houck said she was dubious of Enterprise’s new stance.

“It’s this simple,” she said. “You’ve got to repair anything under a safety recall before you rent out a car, before you lease it, before you sell. Until they agree to that, we’ll keep up the pressure.”

Houck turned up the heat when she posted an online petition last week on Change.org, a social networking website. Within two days, 130,000 people had signed the petition in support of the safety legislation, and with each signature, an email was automatically sent to Enterprise executives.

Among the industry’s concerns: Should federal recalls on defects that aren’t life-threatening — say, a faulty defrost system — be treated with the same urgency as a braking issue? And what should be required of rental companies when recalls are issued after a vehicle has been rented out?

Under the agreement with Hertz, companies should notify consumers driving such vehicles “as soon as practicable,” said Washington attorney Pamela Gilbert, representing safety interests in negotiations with Enterprise and Avis.

Gilbert said: “What’s amazed me is how quickly you can use the Internet to get all these signatures to a petition. No wonder Enterprise is feeling so much pressure.”

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