Is CarMax Selling Unrepaired Recalled Vehicles? You Betcha -- And So Are Other Used-Car Dealers

June 12, 2015

If you're planning to do some  used-car shopping this weekend, take extra care to ensure that your next pride and joy doesn't have any outstanding recalls. Two consumer watchdogs -- the California Public Interest Research Group Education Fund (CALPIRG) and the Consumers for Auto Reliability and Safety Foundation (CARS) -- say that CarMax locations in California have been selling vehicles that need to be repaired.

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To which we say: of course they have. So have a lot of other used-car dealers.

DAMNING REPORT?

In May, CALPIRG and CARS performed sweeps of CarMax outlets in Oxnard and Sacramento. In Oxnard, they found that, of the 455 vehicles on the CarMax lot, 46 were subject to a federal recall, and seven had more than one recall. In Sacramento, 34 of 386 vehicles on offer at CarMax had yet to be repaired. The recalls at both locations covered a range of important issues, including software problems, fire hazards, faulty brakes, and more. 

In a lengthy report entitled "CarMax's Sales Practices Endanger Lives in California" (PDF), the watchdogs go on to say that CarMax's highly touted "Quality Certified" program misleads customers into thinking that CarMax vehicles have been screened for recalls and repaired:

"CarMax’s advertising that all their vehicles are 'certified' may also mislead consumers who are familiar with the 'certified' used car sales offered by competing franchised new car dealerships. Those 'certified' programs are designed to meet criteria established by auto manufacturers, who typically require their dealerships to ensure that any vehicle they offer for sale as a 'certified' car has had any outstanding safety recall repairs performed. For example, General Motors requires that GM dealers who sell 'GM Certified' used cars must complete all recall repairs prior to sale."

CARMAX ISN'T REQUIRED TO FIX USED CARS

If you keep up with the U.S. auto news, you may be asking yourself, "What's the big deal? Of course CarMax doesn't repair recalled vehicles!"

The rest of you may find that hard to believe, but it's true: although federal regulations require new-car dealers to repair recalled vehicles before selling them, the same rules don't apply to used-car dealers -- or rental companies, for that matter.

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Used-car dealerships like CarMax typically justify that loophole by noting that they're not directly affiliated with any manufacturer. As a result, they would have to take recalled vehicles off their lots and transport them to dealerships for repairs.

Of course, there's nothing to stop companies like CarMax from doing that. In fact, from a marketing perspective, it would seem like a great thing to do. So, why don't they? In a press release, CarMax explains:

"Our experience shows us customers are in the best position to act on recall information directly with a manufacturer-authorized dealer. We have found that dealers are often more likely to provide timely recall repair to customers rather than to a competitor, like CarMax, so we encourage customers to have recalls repaired at a manufacturer-authorized facility."

And by "encourage", CarMax really means "require".

OUR TAKE

As screechy as they may seem sometimes, consumer groups like CALPIRG and CARS provide an important service. In this case, they've put some startling numbers out into the public sphere at a time when many shoppers are especially worried about recalls

That said, CarMax hasn't broken any laws. Neither Congress nor agencies like the National Highway Traffic Safety Administration have established regulations to require used car dealers to fix cars. (NHTSA would probably need to be fixed itself before that could happen.)

However, CarMax walks a fine line, encouraging consumers to verify that their CarMax purchases are free of recalls while at the same time trying to assuage customers' safety concerns by using expansive language about its "Quality Certified" program.

We agree that consumers need to be smart about their purchases. We believe strongly in the principle of "caveat emptor" in all its variations. But at some point, used-car companies and rental car companies are going to need to step up their game, bite the bullet, and commit to making recall fixes before selling vehicles. The longer they wait, the more opportunities there are for needless tragedies -- and for brutal lawsuits.

[h/t Auto News]

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