March 2019 Government Affairs Update

 

WHAT YOU NEED TO KNOW FOR MARCH 2019 

·       Federal Trade Commission to hold July Workshop on Product Repair Restrictions (a/k/a OEM tactics for violating the tie-in service prohibition) and seeks research by April 30, 2019.

·       Brown v. Hyundai, new class action takes aim at alleged engine defects in the Hyundai Elantra Nu engine—the same engine first identified as potentially defective by AOCA members in 2016.

·       Souls, Sportages & Tucsons: Hyundai-Kia recalling more vehicles for engine defects.

·       Connecticut taking action against Hyundai-Kia over vehicle defects covered in AOCA’s ongoing petition to the Federal Trade Commission and National Highway Traffic Safety Administration.

·       Senator Blumenthal (D-CT) initiates parallel agency petition on Hyundai vehicle defects.

·       New Jersey Magnuson Moss Warranty Act legislation, S. 1712, reported from Senate Commerce Committee with amendments.


 

FTC Workshop on OEM Shenanigans to Divert Service Customers to Branded Service Centers

On July 16, 2019, the Federal Trade Commission (FTC) will take a deep dive into the current methods employed by OEMs to create the effect of tied-in service requirements.  Among the issues the workshop will examine include:

·       The interplay between repair restrictions and the Magnuson-Moss Warranty Act’s anti-tying provision, which bars manufacturers from conditioning warranty coverage on the consumer’s use of any article or service that is identified by brand, trade, or corporate name;

·       Whether repair restrictions affect the market for extended warranties and service agreements offered by manufacturers and retailers;

·       The types of repair restrictions employed by manufacturers and the extent to which these restrictions are used;

·       The repair market in the United States, and the impact that manufacturers’ repair restrictions have on small and local businesses;

·       Whether manufacturers use software updates that may make products obsolete or unfixable if they have been previously repaired by consumers or repair shops;

·       Whether repair restrictions are needed to reduce the risk of physical injury to consumers and independent repair shop workers, to protect manufacturers from liability for products improperly repaired by independent repair shops or individuals, or for any other reason; and

·       Whether consumers understand the existence and the effects of repair restrictions.

CALL TO ACTION: AOCA members who want the fast lube industry’s research to crush at this critical and historic event are encouraged to get in contact asap with AOCA Policy Advisor Joanna Johnson at jlj4policy@gmail.com.


 

Brown v. Hyundai, 2:2018cv11249 (U.S. Dist. N.J.)

 

Longtime followers of the Hyundai-Kia situation—which includes class actions, recalls, customer complaints, and TSBs going back to ‘05—may guess that the magic word in this case is once again “knock.” And they would be correct. This time, however, it’s the Nu engine knocking. The one in all those Hyundai Elantras that’s caused bizarre engine problems for fast lube customers for the past several years. As it turns out, those customers were very much not alone in their frustration with the engine and related dealerships’ responses to it.

The current class action, Brown v. Hyundai, alleges the particular knocking sound generated by the Nu engine is the result of “piston slap” caused by “an excessive gap between the piston and the cylinder enclosing it.” Because Hyundai dealerships have a history of claiming non-OEM oil filters are the culprit for all problems involving knock, full details of the alleged defect in the amended complaint are provided below.  Members are encouraged to download a copy of the document for future use.

80. On information and belief, piston slap in the Class Vehicles irreparably damages the pistons, coatings applied to the piston and cylinder walls, the cylinder walls, and stresses the entire piston assembly. The impact caused by piston slap removes metal and coatings from the cylinder and piston, and some of this dislodged material is then pulled into the crankcase, where it enters the engine’s oil supply. 

90. In addition, the material that is removed from the piston or cylinder by piston slap leaves small grooves or divots in the cylinder or piston. Unburned fuel, contaminants, and combustion byproducts such as soot, oil an unburned fuel escape the combustion chamber through these grooves or divots and enter the engine’s oil supply in the crankcase.

91. Over time, the accumulation of contaminants in the oil supply from piston slap creates an oil sludge that clogs oil ports in the engine. Clogged oil ports lead to metal-on-metal contact between moving components that are ordinarily separated by a layer of oil in the engine. This metal-on-metal contact creates metal shavings that also enter the oil supply, worsening the oil clogs. Metal shavings in the oil supply can also get lodged between moving parts, causing the engine to seize. (Plaintiff’s Amended Complaint at 20-21)

The Defendant Hyundai’s memorandum in support of its motion to dismiss may also be a wake-up call to anyone unfamiliar with the company’s practice of defending alleged defects with cross-allegations of inadequate maintenance. See Defendant’s memorandum at 7-9, 17 & 21.


 

New Hyundai-Kia Recall

Kia Motor Company is recalling 379,000 Kia Soul small SUVs from 2012 through 2016 with 1.6-liter engines. The claim: high exhaust gas temperatures have damaged the catalytic converters, which causes abnormal combustion that damages pistons and connecting rods. A failed connecting rod can pierce the engine block and cause oil leaks that cause fires.

Hyundai Motor Company is recalling 152,000 Hyundai Tucson SUVs from 2011 to 2013 and Kia is recalling Sportage SUVs from 2011 and 2012 for the same claim: engine oil pan leak that can cause fires.

Hyundai owners are supposed to get notifications starting March 29, 2019. Kia owners are supposed to get notifications starting April 10, 2019.



Connecticut Takes Aim at Hyundai-Kia at both State and Federal Levels

A group of states lead by Connecticut Attorney General William Tong are investigating Hyundai-Kia for potential unfair and deceptive acts in connection with hundreds of vehicle fires involving the Theta II engine.  This investigation parallels work being done by the Center for Auto Safety which overlaps with AOCA’s broader work on the subject. 

After attempting to deal with Hyundai directly, Senator Richard Blumenthal (D-CT) has petitioned the National Highway Traffic Safety Administration (NHTSA) to launch a safety defect investigation into the Theta II engine on a platform-wide basis – which is exactly what AOCA asked NHTSA to do in April 2016.

CALL TO ACTION: AOCA members with facilities in Connecticut are encouraged to provide information regarding ongoing customer issues with Hyundai/Kia Theta II engine vehicles and Hyundai Elantra Nu engine vehicles to AOCA Policy Advisory Joanna Johnson at jlj4policy@gmail.com. 


 

New Jersey Magnuson Moss Legislation

The state Senate Commerce Committee passed an amended version of S. 1712, which would have originally required automobile dealerships to provide customers with notice of their Magnuson Moss Warranty Act (MMWA) rights at the time of purchase. However, New Jersey dealers effectively blocked the bill until amendments were made to shift the notification requirements to automobile manufacturers who would have up to 90 days from purchase to accomplish the MMWA notification.  Although not the aftermarket’s preferred modality, it would still be a net positive for customers to receive MMWA notification in writing from their OEMs. 

The current hitch with the bill is that the amendments also changed the original MMWA notice language from referring to all parts used on a vehicle to only parts used to repair a vehicle.  Nothing in the MMWA distinguishes between maintenance and repair parts, and this state bill—even if passed as is—cannot alter the federal MMWA.  However, it would be totally confusing to consumers and likely erode the effectiveness of MMWA rather than strengthening it.  AOCA is working with related industry reps to get that problem solved on the assembly side with the companion bill, A5225.

STATUS: Oppose unless the MMWA consumer notification text refers to all parts used on a vehicle, as opposed to S. 1712’s current reference to only parts used to repair a vehicle.