Mr. ECKHARDT. We will now take a recess until 10:30. [Brief recess.] Mr. RINALDO [presiding]. The hearing will be in order. Perhaps in the interests of time, Ms. Claybrook, you would summarize your statement. I will see to it that the full statement is included in the record. STATEMENT OF JOAN CLAYBROOK, ADMINISTRATOR, NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, DEPARTMENT OF TRANSPORTATION, ACCOMPANIED BY CHARLES LIVINGSTON, ACTING ASSOCIATE ADMINISTRATOR FOR TRAFFIC SAFETY PROGRAMS AND MICHAEL BROWNLEE, DIRECTOR, OFFICE OF AUTOMOTIVE RATINGS Ms. CLAYBROOK. Thank you very much, Mr. Chairman. I will attempt to do that. Mr. Chairman and members of the subcommittee, I am pleased to appear before your subcommittee today to discuss the National Highway Traffic Safety Administration's evaluation of the auto repair and maintenance problem and the most effective means of addressing it, including the role of diagnostic inspections and further implementation of titles II and III of the Motor Vehicle Information and Cost Savings Act. With me today are Charles Livingston, Acting Associate Administrator for Traffic Safety Programs, and Michael Brownlee, Director of the Office of Automotive Ratings. Earlier this year we studied consumer losses in auto repair and maintenance by systematically evaluating the available investigative and research reports. We analyzed the repair process, assessed the economic losses in that process, and described a number of strategies to reduce those losses. The study was published in May and was widely distributed for comment. We estimate that improper or unnecessary auto repair and maintenance practices cost consumers approximately $20 billion annually. This estimate includes losses from accidents and premature vehicle scrappage that directly result from improperly maintained or repaired automobiles as well as wasted repair and maintenance expenses. This economic waste is not attributable just to the repair industry. Our figures show that about half of the $20 billion loss results from fraudulent, incompetent, or unnecessary repairs. The remaining losses result from automobile designs that place a priority on ease of manufacture over ease of repair and diagnosis, and from owners' misunderstanding or ignoring their car's maintenance and repair needs. The categories of loss we identified, each of which cost consumers $1 billion a year or more, are: Unneeded repairs sold with possible fraudulent intent, $2 billion. Inadequate or incorrect diagnosis of automobile problems leading to unneeded repair, $1.5 billion. Faulty repairs for which owners are charged, $3 billion. "Package" deals including parts or repairs that are not needed, for example, complete brake jobs that include turning brake drums that are in good condition; front-end work that includes replacement of ball joints that are in good order, $3 billion. Wasteful, overfrequent preventive maintenance, $2 billion. Accidents resulting from vehicle defects that arise from undermaintenance or improper repair, $2 billion. Excessive vehicle emissions and wasted fuel resulting from improper or undermaintenance, $2 billion. Cars prematurely retired due to inadequate maintenance, $2 billion. Vehicle design requiring use of overly modularized parts, highly nonstandard parts, or excessively laborious repair techniques, $2 billion. Total, $19.5 billion. Auto repair and maintenance problems are made more difficult by the large number of auto repair and service shops and the increasing complexity of modern vehicles, particularly their engine controls. There are hundreds of thousands of repair and service shops in the Nation. About half of these are defined as "small garages," and even the largest of these facilities handle only a very small proportion of the annual repair business. The need to improve fuel economy with reduced vehicle emissions will continue to stimulate new engine technology, incorporating more sophisticated electronic systems. These new engine systems and other complex vehicle systems will increasingly challenge the auto repair industry. The many facets of the problem and the diverse nature of the repair industry place special constraints on the Federal role in this area. Beyond setting new car standards, we believe the Federal Government can be most effective here as a catalyst. The remedies most likely to succeed are those that provide individual consumers with the tools and information they need to solve their own problems with auto repair. The key lies in providing the consumer with sufficient knowledge and authority to take action, and in eliminating institutional barriers that currently limit consumers' rights of action. There are some jobs that the Federal Government does exceptionally well and others that it does not. NHTSA's regulatory programs dealing with vehicle safety and fuel economy requirements are effective because of the highly concentrated national industry being regulated. But with the very dispersed service industry, the Federal Government can best assist consumers by providing them and their State and local governments with the tools to effectively represent their own interests. In this instance, remedies not built around individual consumer actions tend to be costly and unnecessarily bureaucratic. We have proposed six specific ways that the Federal Government might help consumers and the auto repair industry to improve the present situation: (1) Continue support to State and local governments in developing diagnostic motor vehicle inspection programs. (2) Provide legal remedies for consumers including rights of action for cases of fraud or other illegal activity in auto repair. (3) Promulgate vehicle standards that can reduce maintenance requirements and warn owners of the need to repair or maintain their vehicles. (4) Develop consumer information to aid people in their selection of motor vehicles and to help them understand their vehicle's maintenance requirements. (5) Investigate and regulate unfair trade practices under the authority of the Federal Trade Commission. (6) Provide governmental assistance to foster the establishment and operation of consumer cooperatives. Our auto repair report has been criticized for not paying sufficient attention to the degree to which consumers are themselves responsible for auto repair losses, and for not concentrating sufficiently on remedies that could affect consumer behavior. In fact most of the proposed remedies do attempt to improve the ability of consumers to deal directly with their own automobile repair problems, and all six of the carefully defined activities we recommend for the Federal Government are directed toward giving the consumer the information and tools needed to deal effectively with the problem. The goal we are seeking is to make the system a rational one for the consumer, where he or she can purchase an automobile with reasonable maintenance requirements and ease of diagnosis and repair, can obtain accurate information on the vehicle's repair needs from a diagnostic inspection station, and can have access to fair and competent repair services and to remedies and rights of action in case there are disputes over auto repair matters. We believe that this approach places the authority and the responsibility where it belongs-with the vehicle owner and with local and State agencies that are close to the problem. A major problem in the repair industry is the actual or potential shortage of well-trained and qualified mechanics. We intend, in the near future, to assess the mechanisms for educating and training mechanics, including public schools, private training institutes and programs, and apprenticeship programs. We will work with the Departments of Labor and Health, Education, and Welfare in this important area. TITLE III-DIAGNOSTIC INSPECTION In 1972, Congress expressed its interest in exploring diagnostic vehicle inspection as a mechanism for improving automobile repair, by establishing a demonstration program under title III of the Information and Cost Savings Act. The primary purpose of title III was to gather data on feasibility, cost, and effectiveness of diagnostic inspection as a means of improving the condition of the vehicle fleet, and the quality of auto repair and maintenance. We found that diagnostic inspection programs are feasible and successful in improving the condition of the vehicles in the program while reducing overall repair costs. The participants, many of whom had initially expressed frustration over auto repair, were generally enthusiastic about diagnostic inspection. The specific findings-which results have not been normalized to account for the 65 percent dropout rate, and therefore they must be considered tentative-of the demonstration program were: Safety. The general condition of vehicles in the program improved, and the degree to which systems critical to safety-brakes, |