California Lemon Law Lawyer Blog

GM is running ads touting awards on 15 of its cars from Consumers Digest (not to be confused with Consumers Reports). What GM fails to disclose is that it paid Consumers Digest for the right to mention the awards in the ads. Don't you think the financial incentive had something to do with the awards in the first place?

According to the Wall Street Journal Consumers Digest typically asks auto makers $35,000 for the first award and $25,000 for each subsequent award.

J.D. Power & Associates announces quality awards based on surveys of thousands of new-car owners and auto makers pay as much as $300,000 for copies of a survey and the same amount to use the awards in ads. J.D. Power makes up enough awards in narrow categories (like best quality in first 30 days of ownership) so every auto maker gets awards thus maximizing income. The company's financial ties to the industry mean its reports are as meaningless as those of Consumers Digest.

Clarence Ditlow, director of the Center for Auto Safety said "When they start taking money from car companies, there is a conflict of interest,"

Consumer Reports rarely comes out with a "don't buy" on a new vehicle, but it is saying that with respect to a Lexus SUV, the 2010 Lexus GX 460. The problem is that when pushed to its limits on CR's track’s handling course, the rear of the GX slid out until the vehicle was almost sideways before the electronic stability control system was able to regain control. This, CR explains, could lead to a rollover accident, which could cause serious injury or death.

Continue reading "Consumer Reports: Don't Buy the 2010 Lexus GX 460 SUV" »

As every one knows, Toyota has recalled millions of cars and trucks because of a defective gas-pedal. According to Toyota's press releases, the company acted as soon as it learned a problem exists, but the truth is just the opposite. On February 8, 2010, the Wall Street Journal published an article tracing the history of Toyota's actions and inactions titled "Secretive Culture Led Toyota Astray. (subscription required).

Toyota owners reported they experienced sudden accleration for years. For years, Toyota conveniently blamed the problem on misplaced after-market floor mats. The gas-pedal design was put into use in the 2002 Camry sedan; it uses electronic sensors to send signals to the computer controlling the engine. Toyota adopted the system in the Lexus ES sedan later on. By early 2004, owners had complained to Toyota about sudden acceleration. In 2004, NHTSA, our safety agency, investigated 37 such complaints that involved 30 accidents. Toyota told the agency the floor mats pinned the gas pedal. NHTSA closed the investigation in July 2004.

Complaints continued in succeeding years. Toyota said there was no defect.

In March 2007, NHTSA opened a new investigation on sudden acceleraton in the Lexus ES350; Toyota argued that after-market floor mats were the problem. Owners were told to buy new floor mats, but the reports continued.

Then in December 2008 Toyota's European unit investigated cars in Ireland and England that failed to slow or surged. After months of testing, Toyota found the culprit: a plastic part in the pedal mechanism also widely used in the U.S. Toyota redesigned the pedals for new cars coming off the assembly line, but failed to initiate a recall in Europe or the U.S.

In August 2009, an off-duty CHP officer and his family died when his Lexus ES350 accelerated to more than 100 mph. An occupant made a 911 call when the car was acclerating. The accident was well publicized.

In September 2009, NHTSA told Toyota they needed to resolve the floor mat issue and that replacing the floor mats was not enough. NHTSA told Toyota to later the gas pedals to make sure they don't get caught on the mats. On October 5, 2010, Toyota recalled 3.8 million vehicles to fix the floor mats.

Incredibly, on November 3, 2010, Toyota put out a press release stating "no defect exists" in the recalled vehicles. NHTSA put out its own statement in response saying Toyota's statement was "inaccurate and misleading."

On December 15, 2010, NHTSA officials flew to Japan and told about 100 Toyota executives and engineers that Toyota was obligated to comply with U.S. defect-recall rules.

Less than a month later on Jan 19, 2010, Toyota officials told NHTSA's new chief that there was a flaw in the gas pedals. A few days later Toyota announced a 2.3 million vehicle recall, but it did not have sufficient parts available. NHTSA told Toyota it would have to stop selling cars until the parts were available. On January 26, 2010, shocked everyone by stopping sales of unrepaired vehicles on dealers' lots.

Accident rates for teen age drivers are pretty appalling. An aggravating factor is that parents often give older, unsafe cars to the kids. Given their driving habits, the kids should have the safest cars. Columnist Joseph White of the Wall Street Journal analyzed crash tests and reliability data to come up with recommendations for the best used cars for young drivers. In his article, White first eliminated sports cars for obvious reasons, pickups, SUVs that are prone to roll-overs, and very small cars. He looked for cars with stability control and excellent crash test results.

Using this criteria, among moderate priced cars, he recommends the 2004-06 Toyota Camry with the optional stability control, the 2008-09 Chevrolet Malibu, recent Ford Fusion models with stability control, and the 2006-09 Subaru Legacy. Among luxury used cars, White likes the 2003-06 Lexus ES, 2006 Audi A4 and the Prius models with stability control.

As everyone knows, Chrysler and GM are disenfranchising thousands of car dealers. Lots of used car dealers have gone out of business because of the rescission and poor sales. When dealers go out of business, bad things can happen to buyers.

Dealers may forget to pay off the loan on a trade-in car or to send in the paperwork for an extended warranty or a factory rebate. The dealer may promise to fix or add accessories and may not be around to follow through.

So--do not trade in a car if you owe money on it. Sell it yourself or pay off the loan. If a dealer promises to fix something or add an accessory, make sure the work is done before you sign a contract to buy the car. Or, if a dealer looks really shaky, buy somewhere else!

A Consumer Reports survey found that more than three-quarters (78 percent) of respondents said they were unlikely to consider buying a new car from an automaker in bankruptcy; 64 percent were very unlikely. Further, more than eight in 10 respondents said they are unlikely to consider buying a new car from a division that is being sold or phased out; 63 percent said very unlikely.

To counter this problem, President Obama announced this morning that the federal government will back their car warranties, in an effort to bolster consumer confidence.

The program will involve a separate account that will be funded with cash contributed by the manufacturer and a loan from the U.S. government to pay for repairs covered by the manufacturer’s warranty on each new vehicle. More details on the announcement are available in a NY Times article by Chris Jensen.

Most drivers have complained that their cars could not get the mileage promised by the EPA fuel economy figures. Starting with 2008 models, the EPA revised its testing procedures to more accurately reflect real driving conditions.

J. D. Power surveyed owners of 2008 cars and found that drivers said there were getting 5% better gas mileage than the EPA estimates.

Writing in the NY Times blog, Wheels , Cheryl Jensen reports that before the agency adopted the new method, owners of hybrids were often among the most disappointed that they couldn’t achieve the optimistic estimates on the window sticker. Now, more hybrid owners said they were getting fuel economy closer to what the E.P.A. predicted, or even more.

The Toyota Prius is an example. In the 2007 survey, consumers reported getting only 81 percent of the E.P.A.’s estimates, which were 60 m.p.g. in the city and 51 m.p.g. on the highway. In the 2008 survey, drivers reported getting 94 percent of the new estimates, which are 48 m.p.g. in the city and 45 on the highway.

Automotive News reports that BMW's Mini brand sales were up 52.8% in May 2008 from a year ago, but that J.D. Power reports that Mini owners reported 163 defects per 100 vehicles in the first 90 days of ownership. That figure was only topped only by the Jeep brand with 167 defects in the first 90 days.

Car dealers in California increasingly have arbitration clauses buried in their sales contracts that preclude buyers from going to court. Under these clauses, any disputes are channeled to arbitration forums, principally the National Arbitration Forum (NAF) and the arbitrator's findings are binding. If the consumer loses, he or she cannot reject the award and go to court. This system is not to be confused with such organizations as the Better Business Bureau that provides arbitration in lemon law cases. Under the BBB rules, if the consumer does not like the results, he or she may still file a lawsuit. In that way, the consumer does not give up the right to hire a lawyer and have the case heard by a jury.

That consumers who sign the contracts with binding arbitration clauses unwittingly are foregoing their right to a jury trial is bad enough, but the NAF and similar arbitration forums are, to put it mildly, unfair to consumers. A California law requires these forums to information on who wins these proceedings. The nonprofit group Public Citizen analyzed the NAF data and found that California consumers lost 94% of some 19,000 cases! One arbitrator handled 68 cases in a single day. There is no in-person hearing. Arbitrators who rule for consumers are soon dropped by NAF.

Consumer horror stories involving NAF are common. Mother Jones magazine covered this story in some depth in an article in November 2007.

Other arbitration forums such as the American Arbitration Association are almost as bad for consumers as NAF. Taking a dispute to AAA is quite expensive (especially when it comes to paying the arbitrator). The arbitrators favor the big corporations knowing they won't be chosen for future arbitrations (more fees) if they rule for the consumers.

The car dealers want no part of arbitration when it comes to fighting with the manufacturers over their franchise rights. In 2002, the dealers succeeded in getting Congress to enact a law banning binding arbitration clauses in the dealers' sales and service contracts with the auto manufacturers!

We have talked to many people who have purchased extended warranties for their cars, trucks and RVs. Extended warranties, which are really service contracts, fall into two categories--the good and the bad. The good are those products backed by manufacturers--the GM Protection Plan, the Ford ESP and EXP, the Chrysler Protection Plan and Toyota ExtraCare plan. The bad are all the rest--those plans backed by companies you have never heard of. These companies exist to deny claims. When your car needs an expensive repair, these companies will be sure to blame your lack of maintenance and see the problem as pre-existing your purchase of the vehicle which the fine print excludes from coverage. Plus, the extended warranties do not cover the parts of the car that most often fail--the electronics. Dealers love to sell these warranties because they are so profitable. Bottom line--we do not recommend any extended warranty unless backed by a manufacturer.

When shopping for any extended warranty, the buyer should negotiate the price. There are no standard prices. Check the Internet for dealers offering the extended warranties at favorable prices.

Finally, it is important to know that extended warranties do not give the buyer lemon law rights. The California Supreme Court decided this issue a few years ago (Gavaldon v DaimlerChrysler).