Savvy car buyers know that they may save money by buying an extended warranty (service contract) backed by a manufacturer from any authorized dealer. A NY Times article published August 2, 2008, on the subject of extended warranties features a Rhode Island Honda dealer, Saccucci Auto Group, that has made a business of selling discounted Honda Care service contracts over the Internet (www.myhondawarranty.com). According to Saccucci Auto Group, Honda formerly encouraged its dealers to sell the contracts over the Internet. However, in February 2008, Honda announced a new policy banning Internet sales to protect its dealers' profit margins.

Saccucci Auto Group sued Honda in a state court and a judge temporarily enjoined Honda from enforcing the new policy. Honda then removed the case to the federal district court. On August 25, 2008, the federal court will hold a hearing on the dealer's request for an injunction. A complication for California consumers is that Saccucci is temporarily not selling contracts in California while it researches a California law that may restrict dealer operations to a fixed location. For the sake of competition and car buyers, let us hope Saccucci wins this one!

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.

An ABC news report reveals that aged tires--some as old as 12 years--are being sold as new at leading retailersl After about 6 years of sitting on the shelf, tires dry out and lose their elasticity. The tread will peel off these tires when put in use causing the car to swerve out of control and crash. These tire failures are killing people yet the Rubber Manufacturers' Association and their member tire manufacturers oppose a ban on the sale of tires more than 6 years old, which auto makers and others are recommending. The federal safety agency, NHTSA just this month issued a vague general guideline to "err on the side of caution if you suspect your tires are over six years old."

The tire's date of manufacture is stated on the tire, but in a code consumers cannot readily decipher. The 3 or 4 digit code, which is at the end of a long string of characters,represents the week of the year it was manufactured and the year. For example, 414, means the tire was manufactured the 41st week of 2004. 4202 means the tire was manufactured the 42d week of 2002. Until recently, the code was on the inside of the tire where no one can see it when the tire is on the car!

ABC investigators, some from Channel 7 in San Francisco, shopped tire retailers such as Sears and found tires 4 years, 6 years, and even older available for sale. What is needed is a ban on the sale of tires old tires.

California law allows cars dealers to add a so-called document fee of $55 to each auto purchase contract. There is no good reason the law should allow dealers to add this fee because document preparation is just part of the cost of doing business. Not satisfied with the $55 fee, this year, the car dealers sponsored a bill in the California Legislature to raise the fees to $65, which we estimate would cost California car buyers an additional $40 million per year.

The Assembly passed the bill, but this week the author of the bill withdrew the bill in the face of opposition from key senators, including Senator Ellen Corbett, who chairs the Senate Judiciary Committee. Opposition to the bill was led by Rosemary Shahan, who is head of the consumer advocacy group, Cars for Auto Reliability & Safety. Consumers have Rosemary to thank for saving them $40 million!

Bay Area Checkbook has published a survey of 495 auto repair shops in the San Francisco Bay Area. It found plenty of good and bad shops--195 shops were rated superior for overall performance by 90% or more of their customers while 54 shops were rated inferior, the lowest rating, by at least 1/4 of their customers. The leading complaint was work not performed properly (39% of complaints) followed by poor customer service, high costs, performed unnecessary work, and slow turnaround.

Checkbook subscriptions are only $34 per year. Checkbook is a non-profit well worth our support. Checkbook uses survey techniques to rate vendors and service providers of many descriptions.

Nissan has a new concept car with no reverse. Plus, it is electric. Check it out.http://http://www.cnn.com/video/#/video/tech/2008/05/23/nzekwu.uk.rotating.car.itn

RV manufacturers are experiencing drastic declines in sales and revenue. Buyers are scarce due to high gasoline prices and a poor housing market. RV manufacturer National RV went out of business in November 2007. Just in the last two months, Alfa Leisure, Western RV (Alpine), and Travel Supreme closed down.

On May 13, 2007, the Wall Street Journal reported that Fleetwood Enterprises, which has posted five years of losses, recently sold its Riverside, California, headquarters and is looking for buyers for other properties. Fleetwood's motor home shipments were down 27% from a year ago. Coachmen Industries' sales have declined 40% over the past three years.

Anyone owning a lemon RV manufactured by a defunct manufacturer is typically out of luck in terms of seeking damages.

The Smart ForTwo car is now being sold in by Mercedes-Benz dealers. The tiny car has met with mixed reviews. After the driver's door opened during a side-impact test, the U.S. federal safety agency opened an investigation. The investigation followed a New York Times blog post that includes a video of a Smart car hitting a barrier at 70 mph. The car remained intact, but a door popped open (www.wheels.blogs.nytimes.com/2008/04/04/smart-crash test/).

Separately, in early April 2008, an Automotive News reviewer said the Smart 1.0 liter, 70 hp three-cylinder engine had poor acceleration, the five-speed automated manual transmission makes the car rock back and forth as the driver shifts gears, and on the highway the driver must constantly tug the steering wheel left or right to keep going straight.On the other hand, they are exceedingly easy to park!

To select a safe car or truck, buyers should review the Insurance Institute for Highway Institute reports. The Institute website makes its findings on cars, trucks and baby seats easily accessible.

In April 2008, the Institute released its side impact crash results on midsize cars. Overall, the study shows that small cars are more dangerous than large cars. Occupants of the smallest cars are about 51 percent more likely to be killed in a crash than those in midsize or large cars.

When it comes to frontal crash tests, "good" ratings on small cars only means they are safer than another small car with a lower rating. They are not necessarily safer than a large car with a lower rating. But side-impact crash tests are different. The impact comes from a ram that strikes the car. Because the stricking force is the same for each test it is possible to compare vehicles of different sizes. This leads to some surprising results in the side-impact tests--the small Honda Fit has a higher rating than a 2008 Ford Crown Victoria.

This is an update on the class actions this and other law firms have filed against Michelin and Honda concerning the "PAX" run-flat tires on the 2005-2007 Honda Odyssey Touring minivans and certain Acura RL models.

The cases involve Michelin's "PAX" run-flat tire system consisting of a special tire, support ring, wheel and tire presssure monitoring system. The PAX Systems have proven to be a disaster for consumers--the tires wear prematurely and replacements, which only available from Honda and Michelin dealers, are very expensive costing as much as $300 per tire. Many owners had a great deal of difficulty even finding a Honda or Michelin dealer that had the special equipment needed to replace a PAX tire.

In November 2007, Michelin announced it was throwing in the towel on the PAX System. According to a report in the trade presss, Michelin said it was ending research on PAX "because there is no big market development." Of course, this is a euphemistic way of saying the PAX system has been a failure.

The federal class actions have now been reassigned to a federal judge in the District of Maryland. A separate California state court action is pending in the Alameda County Superior Court on behalf of California owners.

The National Highway Safety Administration ("NHTSA") is the agency that is supposed to regulate auto manufacturers to improve highway safety. For many years, however, the agency has done little or nothing to ensure highway safety; its actions are more in tune with protecting the auto industry than the public. For example, some years ago, the agency failured to warn consumers that Firestone tires on 1991 to 2001 Ford Explorers were prone to blow out and cause roll-over accidents.

Reacting to that failure, in 2000, Congress enacted a law to address the agency's failure to spot safety-related defects in cars, trucks, and tires. The law, known as the Transportation, Recall Enchancement, Accountability, and Documentation Act ("TREAD") directed the NHTSA to report all consumer complaints, warranty payments, and field reports in the event of an injury or death involving a vehicle or tire defect.

However, for years NHTSA did nothing and then made things worse when it enacted regulations to gut the new law. The regulations allow the auto manufacturers to make the data confidential and unavailable to the public. No good reason exists except to protect the auto industry.

The agency has taken other steps to shut out the public and safety advocates from obtaining information on auto safety. The agency formerly had a public library with a great deal of information essential for evaluating the agency's activities. However, in 2006, the agency shut down the library for all practical purposes.

Continuing with its trend to secrecy, NHTSA will not allow journalists to interview the agency's safety experts, which is contrary to the practice going back 20 years. Chris Jensen of the NY Times covered this topic in the NY Times auto blog.

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!

California's Car Buyers Bill of Rights gives used car buyers the right to return the vehicle for any reason within two days, but only if the buyer agrees to pay a fee ranging from $75 to $400 depending on the price of the vehicle. The first problem is that many dealers are persuading buyers to waive this protection. A second problem is that some dealers are simply refusing to take vehicles back even when the buyers paid for the return option. Some refuse to take back vehicles without payment of unauthorized "restocking" fees.

On November 28, 2007, consumer groups held a press conference on the steps of the Capitol to highlight the defects in the law. Rosemary Shahan of the consumer group CARS pointed out there is no good reason a buyer should have to pay anything for the two day right of return. If the vehicle is returned, the law provides for reasonable "restocking" fees and that should be sufficient compensation for the inconvenience.

Rosemary presented KABOB client Oscar Marin Fuentes as someone who was not protected by the Car Buyers Bill of Rights. Fuentes purchased a used 2005 Chevy Silverado from Capital City Motors in Sacramento. The dealer had Fuentes, who does not speak fluent English, waived the two right of return. With a day or two after taking delivery, Fuentes noticed that door would not seal and air was coming in gaps in the cabin. Fuentes returned the truck to the dealer the next day asking for his $23,500 back, but the dealer refused. Investigation revealed the truck had been in two severe accidents, one a roll-over. The air bags had popped.

At the news conference, Fuentes showed the press the problems with the truck. ABC News' video on Fuentes discussing the problems with the truck is here.

Car sales and leases are not sealed with a handshake these days. After hours of haggling, you’ll be told: “Sign here. And here. And here. And here.” Of course, you should get an exact copy of every document signed or initialed at the dealership before taking delivery of the vehicle. Too often, consumers are so excited to escape the high-pressure atmosphere, they hurriedly stuff their papers in the glove box and drive away. Meanwhile, the dealer is completing its own file.

Just what does the dealer keep for itself? Altogether, those items make up the Deal File, sometimes called the Deal Jacket. It contains internal documents that reflect the transaction, parts of which consumers never get to see. The file might include things like the credit application, a four-square page or other paper trail of promises, the ‘recap sheet’ or sales summary, vehicle invoice, finance papers, DMV information, repair history, inspections, trade-in calculations and separate agreements relating to after-market items. Even the front of this folder may have handwritten notes or other key information. Last but not least, the Deal File reveals how much profit was made on the transaction.

Fraud, if there is any, is likely to show up here. An experienced lawyer can peel back layers of deception by doing the math, applying intuition and noticing numbers that do not add up. It is sometimes shocking. Clearly car dealers are entitled to make a profit – that’s what they are in business to do. Yet, the Deal File can disclose profit centers that have nothing to do with the car it self, like a “theft protection” product that costs $37 and is rolled into the vehicle price at $1,400, or a service contract that costs the dealer $250 and is charged to the buyer at $2,500. At some point it becomes unconscionable. We even see instances where the Deal File shows a finance department is cheating its own sales personnel out of commissions just by moving extras from one line item to another.

When I started practicing consumer law in the 1980s, it was hard to get these internal documents. The defendants first denied they existed, and then cited bogus privacy concerns. Now we obtain this essential evidence routinely in the discovery process.

Last month, the California Court of Appeals issued a decision in a case called Lewis v Robinson Ford Sales, Inc. using evidence of the Deal Files to certify a class action for violation of the Rees Levering Act, an important California Truth-in-Lending law. At first the appellate court was going to leave the decision unpublished. We, and a number of other consumer advocates, urged the court to publish the case. The court agreed. Among other things, the case clarifies the evidentiary value of “Deal Files” as standard documents in the automotive industry and recognizes that vehicle transactions “can be evaluated through the deal jacket” for violation of consumer protection laws.

Years ago, manufacturers and their dealers were forever telling owners with problem vehicles this "we've never seen this before" or "the car meets manufacturer's specifications" when the truth was that the manufacturer knew that the problem of which the owner was complaining was both real and to be found in other vehicles of the model. However, owners now communicate with each other about problems with their model vehicle using Internet forums. The upshot is that an owner with a problem vehicle may quickly discover that other owners are having the same problem.

In discovery in one of our class actions against a U.S. auto manufacturer, we obtained a copy of an internal memo that illustrates this development. The author made reference to an Internet forum on the particular truck model in question and then commented, "We can't lie to consumers anymore."

Some of the leading forums are automotiveforums.com, automotive.com, edmund.com/insideline, and rv.net. To find a forum specific to your model vehicle, just search using your model vehicle and the word forum. There seems to be a forum for every make and model vehicle.