Achieving 100% Recall Completion Rates

Takata Airbag Recall Comments Submission (NHTSA-2015-0055) Introduction: Achieving 100% Recall Completion Rates Identifying Systemic Gaps and Suggested Improvement Strategies NHTSA has stated that its goal is to achieve a 100% recall completion rate for Takata airbags. We believe that systematic gaps created by the current approach to managing and tracking recalled vehicles and defective airbags make it impossible to achieve this goal. However, we believe that revising the current approach to utilize tools and information that are currently available in the auto recycling industry can substantially improve the management, tracking, and recall completion rate for recalled Takata airbags. The Current Approach: The current approach of tracking vehicles to track and eliminate defective OEM parts is based on outdated manual notification methods. It doesn t provide bulk electronic access to vehicle and part numbers. As a result, the current recall system does not take advantage of the ability to electronically locate and track recalled vehicles and defective parts afforded by modern information technologies (and hence to increase the removal and remediation of defective OEM parts). With such a high volume recall (approximately 19 million vehicles), we can accelerate the remedy and achieve a more accurate recall completion rate by integrating the recalled vehicle and defective part information into the management systems currently used by auto recyclers. Auto recyclers are high-volume owners of recalled vehicles and defective Takata airbags. For example, airbags from almost 400,000 vehicles subject to the recall have been uploaded to our database from the inventories of our 4,300 auto recycling customers. NHTSA has stated that the recall completion rate for Takata airbags currently stands at 22% (or approximately 4.2 million vehicles). As a result, the almost 400,000 vehicles described above represent nearly 9% of the vehicles that have been remedied to date. Getting working systems and processes in place today can avoid losing information needed to properly account for a substantial number of defective airbags. The Deficiencies in the Current Approach: Several deficiencies in the current recall process combine to create gaps or blind spots which allow for defective OEM airbags to (1) remain in operating vehicles, (2) remain available in the replacement parts marketplace, and (3) be inaccurately accounted for when calculating recall completion rates. These deficiencies include: 1. Lack of adequate notice of defective OEM part recalls throughout the replacement part supply chain. Many owners of defective OEM parts (including auto recyclers which own vehicles containing defective OEM parts and replacement part suppliers that own new OEM surplus parts) are not receiving adequate notice of the recall of defective OEM parts. Public, consumer-directed announcements do not contain sufficient information to allow these replacement part suppliers to accurately identify defective 2015 Car-Part.com Page 1 of 6

OEM parts within their replacement part inventories. This can lead to defective OEM airbags being inadvertently used in vehicle repairs because neither the repairer nor the replacement part supplier is aware that the replacement part is subject to the recall. See Example 1 as footnoted. 1 2. Lack of adequate notice of defective OEM part recalls to certain consumers. Consumers may have had defective recycled OEM airbags and defective new OEM surplus airbags installed in their vehicles prior to the recall (before the defect in the airbags was known or announced). Certain of such vehicles may not even be included within the announced recalls, but may have a defective recycled OEM airbag or defective new OEM surplus airbag in their vehicle due to part interchangeability between their vehicle and a vehicle that was included within the recall. These consumers (particularly those with vehicles that are not included within the announced recall) are not receiving notice of the recall of defective OEM airbags. See Example 2 as footnoted. 2 3. Tracking vehicles to remedy defective parts creates blind spots and inaccuracies, so 100% of recalled defective OEM parts must be tracked and remedied to achieve a 100% recall completion rate. Parts cannot be adequately tracked using vehicle-based tracking. Some parts may be separated from their vehicles and resold as replacement parts by auto recyclers. Other parts (including new OEM surplus parts) were never associated with a vehicle from the outset. The status of these parts are not generally related to the status of any vehicle (ex. assuming that a part initially installed on a vehicle is destroyed when the vehicle is crushed is inaccurate and overstates recall completion rates). In order to accurately compute recall completion rates, the status of each recalled vehicle and the status of each defective OEM part (separately from the status of the vehicle in which it was initially installed (if any)) must be tracked. See Example 3 as footnoted. 3 4. Information needed to account for 100% of recalled defective OEM airbags is being permanently lost because evidence of destroyed airbags isn t being collected. To achieve NHTSA s goal of a 100% recall completion rate, you must account for all recalled defective OEM parts (including those that were destroyed). As described above, assuming that a part was destroyed along with a vehicle is problematic. In order to accurately characterize a defective OEM part as having been destroyed along with its initial host vehicle, a combination of electronic locating (using the VIN and OEM part number) and physical inspection (to obtain the serial number of the defective OEM part for reporting back to NHTSA) is required. Currently, this process does not exist but it could be created to track the necessary information. Every day, vehicles get scrapped without tracking Takata air bag serial numbers and the information necessary to account for such airbags is permanently lost. Without obtaining the serial number of their airbags prior to destruction, there is no way to determine if the defective OEM airbags initially installed in the vehicles were in the vehicles when they were scrapped. NHTSA s ability to achieve 100% accurate recall remedy diminishes accordingly. 2015 Car-Part.com Page 2 of 6

Root Cause: The notification system has gaps, is manual, and is not designed for bulk electronic notification to the information systems of auto recyclers and new OEM surplus part providers that need the notices. Data blind spots occur because vehicle-based tracking is being used to track defective OEM parts that are not always associated with vehicles. In the current approach, serial numbers for vehicles (VINs) and part numbers for the defective OEM parts are not provided to the nondealer replacement OEM parts industry (including auto recyclers, which provide recall remedies when they process and scrap recalled vehicles and defective OEM parts). Bulk VIN information and part number information for the defective OEM parts required to track 100% of the defective OEM parts and remedy status is not electronically accessible in bulk by parties that can help in achieving the stated goal of a 100% recall completion rate. The Remedy: The deficiencies in the current approach can be largely remedied by: 1. Improving the current recall system so it tracks both recalled vehicles AND defective OEM parts. In order to achieve a 100% recall completion rate, NHTSA needs to track both recalled vehicles and defective parts (without assuming that the defective parts remain part of the vehicle upon which they were initially installed). The system should use VINs to track vehicles, and use OEM part numbers and part serial numbers to track defective parts. The information should be available electronically in bulk so that existing information providers can facilitate effective recall management (a simple FTP file access would be sufficient). 2. Providing recall notices to all owners of recalled vehicles and defective OEM parts. Notice regarding the recall of vehicle and defective parts needs to be provided to all owners of recalled vehicles and defective OEM parts, including: (a) auto recyclers (which may not necessarily be the registered owner of a vehicle because their jurisdiction may not require them to register a vehicle that will be dismantled or scrapped); (b) owners of vehicles with branded titles (salvage titles, rebuilt titles, etc.); (c) owners of vehicles whose parts may be interchangeable with any of the defective parts; and (d) owners of new OEM surplus parts subject to the recall. Many of these parties are not being provided with notices of vehicle and defective part recalls under the current approach. 3. Providing electronic recall notices and information to the replacement parts supply industry. Providing (a) bulk electronic VIN data of recalled vehicles (and vehicles with airbags that are interchangeable with the defective OEM airbags), and (b) bulk electronic part numbers (including, whenever available, serial numbers, OEM part numbers, and other identifying characteristics and/or marks that can be used to identify the defective parts subject to the recall) for the defective OEM parts, to auto recyclers allows them to remove defective OEM parts from the consumer marketplace, to provide better tracking information back to NHTSA, and to determine which prior sales require a recall notification. Suppliers of new OEM surplus parts may only need bulk electronic access to the part number information in order to perform such tasks. 2015 Car-Part.com Page 3 of 6

4. Providing recall notices to consumers which may have had defective recycled replacement parts or new OEM surplus replacement parts installed into their vehicle. Providing recall notifications to consumer owners of vehicles which may have had defective recycled OEM replacement parts or defective new OEM surplus replacement parts installed into their vehicles (including non-recalled vehicles that have an airbag that interchanges with a defective OEM airbag) alerts them to the risk that they may have defective parts in their vehicles, and allows them to have the defective part remedied. 5. Accounting for recalled vehicles and defective parts remedied by the auto recycling industry. Tracking the vehicles and parts remedied by the auto recycling industry when they crush a vehicle and/or a part will allow NHTSA to definitively know when a defective part is destroyed and to accurately account for the destruction of such part in its recall completion rate. Conclusion: Auto recyclers are a natural part of a solution which can assist NHTSA in getting closer to its stated goal of a 100% recall completion rate because: (a) they own and process many of the recalled vehicles and parts as well as non-recalled vehicles that may contain recalled parts; and (b) they have sophisticated information management systems capable of tracking both vehicles and parts. An indication of the number of airbags included within the inventories of auto recyclers that upload their inventory information to Car-Part.com (and the number of such airbags that are included within the scope of the Takata recall) is set forth on Table A included herewith. Having vehicle and part level information helps stop the inadvertent sale of defective OEM airbags in the replacement parts marketplace and allows consumers the choice of purchasing good airbags (reducing parts shortage backlogs if there are no replacement air bags inflators being offered by OEMs). We are currently removing nearly a quarter million Takata airbags from our marketplace s part listings nightly based on the limited recall information currently available to us (the year/make/models identified on the NHTSA website as being subject to the Takata airbag recall). The availability of better VIN and part number information would allow us to do a better job of removing defective airbags from our marketplace, to more accurately track the status of defective airbags, and to assist NHTSA in achieving its goal of a 100% recall completion rate. We would welcome the opportunity to expand on any of these ideas and assist with solution development. Please direct all inquiries to recallmatters@car-part.com, or to Car-Part.com, Attention: Recall Matters, 1980 Highland Pike, Fort Wright, Kentucky 41017. Car-Part.com is a leading Internet recycled parts marketplace and a leading auto recycling information service provider with 200 employees and 2,000 years of combined auto recycling industry experience. Over 160 million parts from 4,300 auto recyclers are listed on our website at www.car-part.com. 2015 Car-Part.com Page 4 of 6

Examples 1 Example 1: An auto recycler purchases a salvage vehicle (Vehicle A) and places it in its auto recycling facility for future dismantling. Vehicle A includes a defective OEM part (Defective OEM Part) that is not subject to a recall at the time that Vehicle A is acquired by the auto recycler but is subsequently recalled by OEM 1. Applicable law does not require the auto recycler to obtain a new vehicle registration for Vehicle A because the vehicle is going to be dismantled and scrapped. OEM 1 sends notice of the recall of Defective OEM Part to the prior owner of Vehicle A (the last registered owner of Vehicle A) but does not send notice of the recall of Defective OEM Part to the auto recycler. Defective OEM Part is effectively being held in the auto recycler s inventory for future sale (in which case it may be inadvertently sold at a later date and installed on an operating vehicle) but the auto recycler is not informed to take action and does not realize there is a problem with their inventory because of a notification issue. 2 Example 2: A 2010 Make/Model (Vehicle A) is involved in an accident that involved the deployment of its passenger airbag. The repair facility contacts an auto recycler (Auto Recycler) to obtain a replacement airbag. Auto Recycler has a recycled 2007 Make/Model airbag (Recycled OEM Airbag). Based on two independent data sources available to Auto Recycler, there is only one OEM part number for the airbag that fits Vehicle A (with no reported supersession numbers) and the applications from both data sources indicate that the OEM Surplus airbag will fit 2007-2010 Make/Models. Auto Recycler sells the Recycled OEM Airbag to the repair facility and the repair facility uses it in the repair of Vehicle A. Subsequently, OEM recalls 2002 2007 Make/Models due to a defect with the airbag inflator. Recycled OEM Airbag (which has been installed in Vehicle A) has the defective inflator which is the subject of the recall, however: (a) Auto Recycler is not provided with notice of the recall; and (b) the owner of Vehicle A is not provided with notice of the recall because Vehicle A is outside the scope of the recall (which only covered 2002 2007 Make/Models). The part numbering aspect of this example uses an actual vehicle. 3 Example 3: A part (Recycled Part) is removed from a salvage vehicle (Vehicle A) by an auto recycler, and sold to a repair shop to repair another vehicle (Vehicle B). Recycled Part is not subject to a recall at the time it is removed from Vehicle A and installed on Vehicle B. Vehicle A is subsequently scrapped by the auto recycler. Recycled Part is subsequently recalled by OEM 1. OEM 1 finds that Vehicle A has been scrapped and considers the recall of Recycled Part to be complete/satisfied. However, Recycled Part is still on an operational vehicle (Vehicle B) but is no longer considered part of an open recall by NHTSA or OEM 1. The owner of Vehicle B may or may NOT receive notice about the recall of Recycled Part from OEM 1 (whether the owner of Vehicle B receives notice of the recall is based on the recall status of the part initially installed in Vehicle B if the part initially installed in Vehicle B was not subject to the recall, the owner of Vehicle B would not likely receive notice of the recall even if Recycled Part is subject to the recall). 2015 Car-Part.com Page 5 of 6

TABLE A Recycled Air Bag Market By the Numbers * Quantity Description Significance 19,200,000** Number of vehicles to date included within the Takata airbag recall Large volume problems requiring 100% accuracy will work best if the solution works electronically with existing information systems technologies. Even a small percentage of unaccounted or miscounted defective parts under the current recall process implies that there are thousands of non-remedied vehicles and defective parts. 3,761,434 Snapshot of the number of recycled airbags in auto recycler inventories uploaded to the Car-Part.com database Recycled airbags are a standard part of the replacement parts market and should be accounted for in the NHTSA recall system. 245,145 Number of inventoried airbags on vehicles subject to the Takata recall that are in auto recycler inventories uploaded to the Car-Part.com website This is the number of Takata airbags that we are removing from our marketplace s part listings nightly based on the year/make/models identified on the NHTSA website as being subject to the Takata airbag recall. We need VIN and OEM part numbers to improve accuracy. In the meantime, we are filtering good parts with the recalled parts to keep the recalled parts from being listed. 370,556 Number of vehicles in Car- Part.com s historic database subject to the Takata airbag recall that also had an airbag inventoried with the VIN This number represents the potential number of recall remedy entries that can be made more accurate. It is based on ambiguities in the year/make/models identified on the NHTSA website as being subject to the Takata airbag recall. We need VIN and OEM part numbers to improve accuracy. *Source: Car-Part.com Industry Database drawn from 4,300 Salvage Yards in US (~80% of the full service recyclers with an electronic inventory system) **Source: NHTSA 9/2/2015 2015 Car-Part.com Page 6 of 6