Last month, Bertel reported on a Wall Street Journal story that revealed that BMW USA officials inflated sales figures in their zeal to overtake rival Mercedes-Benz in US sales. The automaker was offering dealers cash to basically sell the cars to themselves, under the guise of the units being used as customer demonstrators. The WSJ piece was met with laughter in the halls of car companies, as the practice is common to most automakers. The hilarity has officially ended: a former American Suzuki sales rep was just indicted for wire fraud for conspiring with a dealer to inflate sales figures.

On Thursday a Spartanburg, South Carolina federal grand jury indicted ex-Suzuki automobile dealer Joe Gibson and eight of his former employees for conspiracy to commit wire fraud. The charges were straight out of The Scumbag Car Dealer Handbook: falsifying information on customer loan applications, deceptive sales practices and misleading marketing, specifically for ads offering new cars for $44 a month. Gibson went bankrupt in 2008 after hundreds of angry clients filed lawsuits against the store.

Also charged was ex-American Suzuki field rep Brian J. Sullivan. According to the indictment, defendants did, “devise a scheme and artifice to defraud and to obtain money and other things of value from American Suzuki Motor Corporation.” In other words, on the last day of the month Sullivan might call dealer Gibson and say something like, “Hey Joe, buddy, I need you to report 12 of your SX4s and 4 of those Forenzas today. Don’t forget you will get $750 per and please come up with better names for the bogus buyers than last month – my boss wondered why someone named “General Robert E. Lee” bought that XL7.” Gibson would input the sales and get the cash incentives, Sullivan would hit his quota and American Suzuki would report their inflated sales numbers to their bosses in Japan and to the press. All was well – except for the fact they had just committed wire fraud.

Whether using names of friends, family or those plucked from the phonebook to use as ghost owners, or classifying the cars as “demos,” the vehicles are still brand new and still on the ground, and thus should not be counted in carmakers’ numbers.

The indictment also referred to the act of falsifying sales as “punching” a car, a term derived from the old days of physically punching a “report of sale” card into a computer. Over the years, the term has gone from “burning” to “dumping” to “flushing” to “punching” and car dealers probably know a dozen more.

Sullivan may be the first automobile company manager to ever be indicted for directing retailers to fake sales numbers. The repercussions of this case might resonate through automakers and put a stop to a practice that is as ancient as the hills. The book Arrogance and Accords devoted an entire chapter to American Honda’s “flushing” of sales cards in the 1980s and 1990s.

A gentleman named Louis Bird is suing Hyundai because his 2011 Elantra isn’t getting the claimed 40 mpg that Hyundai’s ads apparently tout. Bird is being supported by a group called Consumer Watchdog, and if that rings a bell, maybe it’s because TTAC has dealt with them  a few times in the past regarding Hyundai.

Before we delve into Louis Bird’s folly, let’s recap the situation for those who are just tuning in. Consumer Watchdog has been hassling Hyundai since December regarding the Elantra’s 40 MPG highway mileage claims.  Mileage tests are often conducted by the automakers who then report their findings to the government, with the threat of severe financial penalties if they lie. Independent testing done by our own Jack Baruth returned  “35-36 mpg in conditions which were far from the test lab“, with Baruth being satisfied by the results, even if they didn’t quite hit the 40 MPG mark that is possible under the carefully controlled conditions of a fuel economy test. Popular Mechanics was another publication that managed to match Hyundai’s claims.

The lawsuit appears to hinge on the fact that Hyundai apparently advertised the car as  “The 40 MPG Elantra”, without a voice-over disclosing that the 40 MPG figure was related to a highway mileage estimate, without stating that city figures would vary significantly. The complaint acknolwedges that disclaimers did appear, but they were  “neither clear nor conspicuous” since they were comprised of text being flashed at the bottom of the television ads. Bird is alleging similar tactics were used for print ads.

A chat with TTAC’s General Counsel didn’t yield a whole lot; being unfamiliar with California law, he was unable to accurately assess how successful Bird would be in getting a judgment against Hyundai. He did have some commentary on the peripheral details of the case

Google’s nutty pseudo-utopian autonomous car project faced a reality check at a legal symposium sponsored by the Law Review and High Tech Law Institute at Santa Clara University. Among the challenges raised were the prospect of insuring such a car, and whether the car would be able to stop for law enforcement or construction workers.

While Google claims that their autonomous cars have driven more than 200,000 miles  of accident-free driving, issues like whether police can pull over autonomous cars, as well as technological limitations with artificial intelligence, still remain as stumbling blocks. Google is throwing a lot of time and energy into having laws changed so that autonomous vehicles are road legal, but based on the concerns raised by experts, it looks like self-driving vehicles still have a long way to go before becoming viable.

A TTAC lurker writes:

Sajeev, I’m local to Houston and greatly look forward to my daily lurk on TTAC. I just had to respond affirmatively to the latest piston slap about HID’s and Panthers.

 

I own 2 CV’s, an unmolested 2003 Sport:

…and a 2002 HPP with various mods/tune: you will note the projector headlights in the ’02. I couldn’t agree more with the comments about the cheap HID kits and resulting glare/distraction to other drivers. In my case I went the route of a complete E55 projector retrofit and new wiring harness for a proper and adjustable installation. I’ve included a complete DIY I had posted on crownvic.net under my now-sold PI moniker Blue95 for your reading pleasure! IMO the only way to install HID lighting. Has been installed for about 2 years, no operating issues at all and no problems with state inspection.

HID Write-up w Pics2

In our first installment, TTAC Commentator jco wrote:

There’s just no way you’ll get acceptable beam pattern and anything less than atrocious amounts of glare if you wire up an HID kit in halogen-designed open reflector housings….so the housing was designed to shape that type of light. And yes, I see junky HID kits in reflector housings all the time. it just looks cheap and wrong. there are usually huge hot spots at the top of the housing, specifically throwing glare at others. i don’t think there are any OEMs using HID in a non-projector housing.

I installed a well-made (it came with a wire harness with in-line fuses and directly plugged into my headlight harness. it takes the stress of the increased startup power away from the factory wiring) HID retro kit in my truck. But my truck already has projector housings for the low beams. though the lenses are not optimized for that type of bulb, they work about 90% as well a true OEM setup. and i spent time adjusting the level on the beams. i have driven another car in front of my truck at night and it’s not glare-y at all.

some people will take an open reflector housing, pull it apart, and install OEM projector components. if you’re skilled with a dremel tool you can probably do that in just about anything. it’s still gonna look weird in there, but you’ll have a better performing light setup. that’s beyond the level of most people who just buy a kit from ebay and plug it in.

In summation: you want aftermarket HIDs?  Get projector housings, make them if necessary. Order HID bulbs that are on par with the brightness of OEM applications.   Put it together with quality wiring and electrics. Aim them correctly.

Easy, right? 

Send your queries to sajeev@thetruthaboutcars.com . Spare no details and ask for a speedy resolution if you’re in a hurry.

Robin writes:

So when I get my next big check I’m getting me a Panther. On this you can depend. You’ve talked me into it! But that’s not the point of my email. Rather, I’ve seen these HID light kits and wonder if it’s a lot of hype or if there is some veracity to the upgrade?

Sajeev answers:

Oh yes!  How lovely to hear you will be joining us enlightened American auto-connoisseurs in the Land of the Last Land Yacht: Panther Love…Son!

Like I mentioned in the last Piston Slap, HID retrofits are usually a terrible idea.  Aside from their durability and inherent poor value, they are not a “bright idea” (sorry) when performing a headlight retrofit/upgrade to your non-HID car. A few notable exceptions include me, when I upgraded my 1995 Lincoln Mark VIII’s headlights with the factory HID system used on certain 1996 models.  It was all factory parts, and worked great…until time and orphan parts reared their ugly heads.

Long story short, there is no real scientific benefit to HIDs if you don’t have a headlight assembly designed for the HID bulb.  And sometimes, depending on headlight lense design and bulb choice, it’s more of a detriment. And the only Panther that can safely run HIDs are 2003-2011 Town Cars with the (optional) factory-installed HID lenses. Everything else throws out a ton of glare and is dangerous for fellow motorists. And yourself, if you encounter a lot of reflective signs on the road or drive in thunderstorms at night in urban lighting conditions.

Plus, most of these aftermarket kits are quite unreliable: from the quality of wiring, durability of relays, and design of bulbs, calling these HID retrofit vendors “hit or miss” would be an understatement.

Plus again, many of these kits are downright illegal.  Even if they are DOT approved, are they legal for use in your state?  Better find out before you buy.

One last remark: the non-HID’s on my father’s 2006 Town Car are disturbingly close to the general lighting quality of the HID’s in my 1995 Mark VIII. Who says these Panthers are old school? Their lighting pods are pretty darn high-tech!

Send your queries to sajeev@thetruthaboutcars.com . Spare no details and ask for a speedy resolution if you’re in a hurry.

When private, for-profit firms ask for public money, taxpayers tend to take a more personal interest in their goings-on. After all, they are, in a very real sense, still the partial owners of these companies, and they put up the cash to provide a second chance to companies that offer no similar reciprocation when consumers default on their own car loans. And though US taxpayers have earned the right to feel a sense of ownership towards GM and Chrysler, there are several groups of Americans who have shouldered a disproportionate amount of the burden of the bailout. First, the GM and Chrysler employees who were laid off despite the bailout must doubtless wonder why they had to both fund the bailout and lose their jobs (remember, cutting jobs was the most “positive” aspect of the bailout, according to the industry). Similarly, GM and Chrysler’s bondholders paid twice to “save” their failed investments, once with their tax money and again by taking a hefty cramdown. And finally, a third group paid far more than anyone else, not only funding the bailout with with their taxes, but also sacrificing compensation for injuries caused by GM and Chrysler vehicles. The WSJ [sub] reports

Among the creditors who suffered most, car-accident victims represent a distinct mold. Unlike banks and bondholders, this group didn’t choose to extend credit to the auto makers. As consumers, they became creditors only after suffering injuries in vehicles they purchased.

“This was not a normal case. The government was deciding who was going to be taken care of and who was not,” said David Skeel, a University of Pennsylvania law school professor and bankruptcy expert who has testified before Congress on the auto bailouts. Even if the auto makers had legal rights to leave behind product-liability claims, “there is a deep unfairness,” he said. “It would have been easy enough to set something aside for them.”

Given the celebratory, even triumphalist, rhetoric that’s being applied to the auto bailout after the fact, it’s important to remember that many suffered in order to give GM and Chrysler a second chance. Even those who are proud of the bailout’s accomplishment should acknowledge that the jobs saved carried a price that goes beyond any final accounting of anonymous billions lost from the federal budget. The pro-bailout crowd should take more care to recognize and heal the deep wounds that fester beneath their “Mission Accomplished” rhetoric… if only to prevent a repeat of these tragic decisions in the event of future industry rescues.

Should you be afraid of towing in a new Ford Explorer? Though the newly-unibody Explorer is rated for up to 5,000 pounds, Jack Baruth noted in his review that

My experience pulling my race car on an open trailer with my Flex indicates that the D4 chassis is more than up to the job, but that the transmission just feels delicate. Serious towing with a sideways gearbox frightens me, and it should frighten you, too.

And though you might well share Jack’s nervousness about towing in a new Explorer, the law of the land says it’s safe pulling up to 5,000 pounds. Even so, Consumer Reports found out the hard way that not everyone believes in the Explorer as a safe, effective towing machine. Namely the equipment rental company U-Haul appears to have some kind of problem with the Explorer, as  CR’s Eric Evarts explains

I called U-Haul to see about renting their largest, 6×12-foot open trailer to drag the mulch home. “Come on down! $29.95 for the day,” the friendly attendant said.

Eager to finish that day and save $18 by delivering the mulch myself, I trundled off to the local U-Haul lot. As the workers started to fill out the paperwork inside, their faces went ashen the second I said, “Explorer.”

“Sorry, we won’t let any equipment out behind an Explorer,” they said, and began putting away their pencils.

Huh?

Huh? is right. One might well worry about the long-term effects on ones “sideways transmission’s” health, but that should hardly concern U-Haul. Do they care if you need a rebuild at 50k miles? Not so much. Nor are they concerned that unibody construction makes for a less capable or safe hauler. In fact, U-Haul’s concern seems to date back to the previous body-on-frame Explorer, to which the new CUV is in no way related.

“Corporate policy, since the Firestone lawsuits,” they said. “Sorry, there’s nothing we can do for you.” (Ford was sued in a class-action lawsuit in 1998 over defective Firestone tires on early Ford Explorers, which led to several deadly rollover accidents. The lawsuit was eventually settled. But this new Explorer has zero in common with those early SUVs except the nameplate.)

When we called U-Haul corporate later to check on the policy, Joanne Fried, director of media and corporate relations confirmed the policy. “Every time we go to hire an attorney to defend a lawsuit, as soon as we say ‘Ford Explorer,’ they charge us more money.” She said the policy also applies to Jeep Wranglers, unless they have a hard-top installed.

As we waited on hold for a few minutes, the corporate recording recited: “If you need to tow, U-Haul is the only name you need to know, and the only place you need to go.” Apparently not if you drive a Ford Explorer. In that case, you need to go elsewhere.

Talk about a perfect illustration of the state of legal liability in this, our most litigious society. Because the new Explorer is called an Explorer, and because layers charge U-Haul more for doing business with any Ford Explorer owner, U-Haul and its obviously scrupulous and detail-oriented lawyers have completely failed to notice that the new Explorer has literally nothing to do with the old one. Which would be akin to arguing that the CR-Z shouldn’t be called a hybrid because it’s the “spiritual successor” to the CRX. Or buying a new Buick Regal or Scion xB because you liked the previous one. Earth to U-Haul: the new Explorer has no more to do with the Firestone recall than the Ford Edge or Flex. Time to tell those lawyers they have their heads up their… pocketbooks.

A lawsuit against Mazda is moving to the United States Supreme Court, reports Bloomberg, challenging whether automakers should have been required to install shoulder belts in all of its seats prior to current regulations requiring the improved belting systems took effect in 2007. The case centers on a 2002 accident in which Than Williams was killed when a Jeep Wrangler hit her family’s 1993 Mazda MPV. The Williams MPV had only lap belts because shoulder belts weren’t required by federal law until 2007. A California court has already barred the lawsuit from coming forward, arguing that federal regulations supersede any local rulings, and that then-legal seatbelts should protect manufacturers from personal injury liability. However a recent case casts some doubt on the precedents in the Mazda case…

The Supreme Court last year, ruling on preemption in a different context, said consumers can sue drugmakers for failing to provide adequate safety warnings. The 6-3 ruling said pharmaceutical companies aren’t shielded from suit by the U.S. Food and Drug Administration’s approval of a treatment and its packaging information.

In other words, if drug manufacturers can be liable for injury even if packaging complied with federal law, accident victims should be able to sue automoakers for injuries sustained in legally-compliant automobiles. But, if the SCOTUS rules with the Williams family, the auto industry worries that it could

face crushing liability in 50 states from 50 different systems

We’ll be sure to keep an eye on this case, as it clearly bears on a number of important safety issues in the industry right now, specifically the legal liability incurred by Toyota during its unintended acceleration scandal.

In the second bit of bad news for Toyota to break today, Corporate Counsel reports that former Toyota lawyer Dimitrios Biller has been cleared by an arbitrator to present evidence that Toyota claimed was protected by attorney-client privilege. That evidence reportedly proves that Toyota concealed safety information, although its value has been hotly debated. The evidence will be presented in Biller’s civil RICO suit against Toyota now that the arbitrator in that case has ruled that hey are not protected by attorney-client privilege. Biller tells CC

Attorney-client privileged information almost never gets to the finder of fact to determine the merits of the case. I am halfway there. The burden is now on Toyota to prove me wrong

But for full context, a retired federal judge clarifies that

The Arbitrator does not rule that a crime or a fraud has taken place. The ruling is simply that a prima facia showing has been made, so otherwise-privileged materials may be used in discovery and arbitration.

Toyota’s lawyers responded to the ruling as well, saying

the arbitrator applied a very low standard, and he specifically noted that this preliminary motion was only to decide whether certain evidence is usable at the final hearing and was not an opportunity for Toyota to present a full contest of Mr. Biller’s allegations, although we were prepared to do so. We are confident that Toyota will be vindicated once we have the opportunity to fully contest the allegations, and all evidence is considered, at the final hearing.

Like today’s earlier Toyota story, this ruling doesn’t prove that Toyota did anything wrong per se, but it certainly keeps the negative news about the Japanese automaker rolling along. With Toyota’s stock taking a beating though, the little bits of bad news have a way of adding up.

Tomorrow the Senate will be taking its shot at the Toyota scandal, with hearings scheduled before the Committee on Commerce, Science & Transportation. Giving testimony will be three Toyota executives including Yoshimi Inaba, NHTSA Administrator David Strickland and Clarence Ditlow of the Ralph Nader-founded Center for Auto Safety. Conspicuously absent from the list is Dimitrios Biller, the former Toyota lawyer who claims that Toyota hid documents related to vehicle design from discovery in several suits against the automaker. The House Oversight Committee has reviewed a number of Toyota communications courtesy of Biller, and a letter from chairman Ed Towns (D-NY) demands that Toyota answer Biller’s charges [Towns' letter and Biller documents in PDF format here, courtesy of DetNews]. By invoking Biller’s charges, Towns has dragged yet another witness into the fray whose story raises more questions than it answers [one of Biller's several suits against Toyota can be found here.] And yet, probably because of his complex backstory] there are no plans for Biller to testify under oath before congress. Should he, or does his testimony just cloud the picture even further?

Compared to the tens of billions of dollars in lost taxpayer investments in GM and Chrysler, the lawyer bills for the twin bankruptcies are relatively inexpensive. The Freep reports that legal and consulting fees have already exceeded $120m, with another $3m pending for September and October, and more to come. According to court records, Chrysler’s chief financial advisors during its bankruptcy, Capstone Advisory Group, has received $17m in taxpayer money, with some $10m going directly to the firm’s Executive Director Robert Manzo. Chrysler’s lead counsel, Day Jones, received $40m through last August, and estimates place the firm’s eventual tab to total somewhere around $115m. GM’s bankruptcy advisors AlixPartners and Evercore Partners received $26m and $13m respectively, while its head lawyers, Weil, Gotshal & Manges received nearly $72m. And with the liquidations of Old GM and Chrysler far from over, the legal bills will continue to mount, likely past 2010.