published Saturday, December 28th, 2013

Tennessee Motor Vehicle Commission mulls allegations Southern Honda sold recalled motorcycles

Southern Honda Powersports showroom on Workman Road in Chattanooga is shown in this 2008 file photo.
Southern Honda Powersports showroom on Workman Road in Chattanooga is shown in this 2008 file photo.
Photo by Tim Barber /Chattanooga Times Free Press.

The Tennessee Motor Vehicle Commission is taking a wait-and-see approach in response to allegations that Chattanooga-based Southern Honda Powersports sold hundreds of dangerously flawed motorcycles between 2007 and 2012.

The commission has the authority to discipline Southern Honda -- the largest Honda Powersports dealership in the U.S -- if it finds that the dealership engaged in false, fraudulent or deceptive acts. The board is awaiting the outcome of an ongoing investigation by the Tennessee Attorney General's office before making a decision, according to recently published board minutes.

Former Southern Honda contractor Ernest "Pug" Vickers III, who filed the original complaint to the state agency, said the board could terminate the license of company Southern Honda owner Tim Kelly if it finds that the dealership knowingly broke the law.

"If it's determined that they violated the consumer protection act -- and if they did, they did it at least 420 times -- then the Tennessee Motor Vehicle Commission has no choice but to terminate Tim Kelly's dealer's license," Vickers said. "When American Honda Motor Co. issues a 'stop-sell' order and tells the dealer in black and white, 'Do not sell this vehicle under any circumstances because you're placing your customers' lives at risk,' such a statement would not have been made by the manufacturer were it not a certainty that the dealer would be behaving unconscionably by selling this bike to an individual without having repaired it."

Kelly declined to comment, except to note that the investigation -- first announced in September 2012 -- was "old news."

Federal and state agencies acknowledged launching investigations in September 2012 after reporters began asking questions about allegations made by Vickers and other former Southern Honda employees. Vickers provided documentation to news organizations indicating that he attempted to blow the whistle on Southern Honda in 2007 and 2010, but neither federal nor state regulators took any action until contacted by a reporter.

Kelly agreed in March 2013 to pay $125,000 over five years to settle an investigation by the National Highway Traffic Safety Administration without admitting any wrongdoing. At the time, Kelly said that Southern Honda had started to offer free safety inspections to anyone, and noted that no deaths had been reported as a result of the sale of any recalled vehicles.

"We've got processes in place now where it's impossible for vehicles to leave without a recall being performed," Kelly said at the time. "Honda changed their systems, and we changed our systems."

Sharon Curtis-Flair, a spokeswoman for Tennessee Attorney General Bob Cooper, confirmed that a state investigation is ongoing, but no action has been taken.

Contact staff writer Ellis Smith at esmith@timesfree press.com or 423-757-6315.

about Ellis Smith...

Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...

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