Interpretation ID: nht93-2.2

DATE: March 1, 1993

FROM: Peter Drymalski -- Investigator, Montgomery County Government, Office of Consumer Affairs

TO: John Womack -- Acting Chief Counsel, NHTSA

TITLE: Application of 15 U.S.C. Section 1403 to the "Cannibalization" of Unsold New Cars for Repair Parts

ATTACHMT: Attached to letter dated 5/3/94 from John Womack to Peter Drymalski (A42; Part 567; VSA S108(a)(2)(A))

TEXT:

I am writing to request your office's assistance on an issue that has been brought to our office and which may involve Federal laws enforced by your agency.

A local new car dealer recently sold two 1993-model year vehicles. Shortly after the sale, both vehicles were returned for power steering pump failures. The dealer and the distributor had no power steering pumps in stock and had to order them from Japan. This resulted in a lengthy delay in completing the repairs, so much so, in fact, that the 30- day out-of-service deadline of the Maryland Lemon Law (Commercial Law Article, Section 14-1502(d)(2) was about to come into play.

According to the dealer, the distributor advised the dealer to remove two power steering pumps from other, unsold, 1993 models and install them on the two vehicles awaiting parts. The dealer refused, believing that this was illegal. Fortunately for the distributor, the parts then arrived and the repairs could be completed within the 30-day deadline. Nonetheless, the distributor has apparently insisted that the dealer prove its claim that the cannibalization of unsold vehicles is illegal.

I do not know of any Maryland law that prohibits this, although our laws would probably require the dealer to disclose the repairs when it sells the cannibalized cars as "new" after they're repaired.

However, such cannibalization may affect the cannibalized cars' certifications under 15 U.S.C. 1403 and 49 C.F.R. Part 567, or under other laws. Is such cannibalization allowed and, if so, on what conditions?

I will appreciate your office's review of and assistance on this matter.

Thank you very much.