It's a Car Dealer AND a Congressman!

I was almost starting to feel sorry for car dealers. Elon Musk's Tesla (also maker of lethal self-driving cars and rockets that blow up on launch pads) has been venturing into the car dealership business and becoming a real threat to that industry. Writes the Washington Post,

For generations, automobile manufacturers from Ford to Toyota to General Motors have been banned by state law from selling directly to consumers. Instead, their vehicles are sold by third-party dealers, many of which have deep ties to their community and political leverage.

But Tesla has been steadfastly eroding the traditional model, persuading an increasing number of states to allow it to sell vehicles directly to customers through its boutique stores and even over the Internet. In April, through little more than online viewing galleries, customers committed to buying 400,000 cars they had not seen in person.…

If other carmakers followed Tesla, “essentially, it would put us out of business,” [longtime auto dealer Blake] Arbogast said.

I know. WAA WAA WAA! You kind of sympathize because who wants Elon Musk selling you a car? But then I remembered: that “political leverage” point above? Let’s just say, they don't always use it in the customer's best interest.

As we wrote last December, Congress finally passed the Raechel and Jacqueline Houck Safe Rental Car Act, a law that bans:

"rental car companies from keeping cars in operation that are subject to recalls until the necessary fixes are made." It’s not a perfect fix. Cally Houck, who worked so hard on this, “said in a statement she was thrilled by the measure but remained ‘deeply concerned’ about a loaner car loophole that exempts car dealers with fewer than 35 cars for renting or loaning to customers.”

That is correct: under this loophole, many car dealers can still rent or loan you cars under safety recalls.

Why did this happen? It begins with U.S. Rep. Roger Williams, a Texas car dealer himself who admits that “his business does indeed offer rental cars for use by customers who are getting their vehicles fixed as well as loaner cars.” Bad enough that he's in Congress benefiting from a loophole like this. Turns out, Williams was behind the whole thing. Explains the Center for Public Integrity this week:

The Raechel and Jacqueline Houck Safe Rental Car Act, finally made it into law as part of a massive transportation bill in 2015. But during the process, there was a hiccup. The bill faced resistance from the National Automobile Dealers Association, a powerful trade association which was concerned that its members might be forced to ground vehicles for “minor” defects.

Rep. Williams offered an amendment on the floor of the House just before midnight on Nov. 4 that alleviated the dealers’ concerns. It would, as understood by Williams and NADA, carve out an exemption for auto dealers. It would, in effect, allow them to rent or loan out vehicles even if they were subject to safety recalls. Dealers often loan or rent cars to customers who are getting theirs serviced.…

During that process, Williams’ amendment was tossed out. But the car dealers’ presence was still felt.

In the conference committee, it was decided that establishments that rent fewer than 35 cars would be excluded, meaning car dealerships would not be affected.

“It was a victory of low caliber,” said Cally Houck, mother of the young women who were killed. She won’t be happy until the loophole is eliminated altogether.

“I continue to look forward to taking them on again."

There is a reason the Center for Public Integrity is covering this right now and it’s pretty mind-boggling. Back to Rep. Williams, who is now being investigated on ethics charges:

Williams asserted in a statement that he did not profit from his actions.

Instead, Williams revealed, he offered the amendment at the behest of a lobbyist. And the lobbyist — whose employer, the National Automobile Dealers Association, one of the congressman’s top donors — was even kind enough to send along “proposed language” for the text of the amendment.…

That right. He’s defending himself by saying he wasn’t helping himself, he was helping a lobbyist … and I guess who doesn't do that for the right price?

“It seems to me that if it isn’t illegal, if it isn’t an ethics violation it ought to be,” said [Rosemary] Shahan, president of Consumers for Auto Reliability and Safety, a consumer group. “His amendment benefits nobody but car dealers. And he’s a car dealer.”

Apparently, Rep. Williams hasn't been very cooperative with the Office of Congressional Ethics. The House Ethics Committee is continuing its investigation.