IF YOU KNEW WHAT SUBARU KNEW, YOU'D BLOW A GASKET
Ramo, Alan
If You Knew What Subaru Knew, You'd Blow a Gasket BY ALAN RAMO It was the summer of 1978, and Moshe Hirschberger, a thirty-four-year-old Israeli physician, had just completed a graduate fellowship...
...Their depositions tell of frightening stalls in traffic, although they were luckier than Hirschberger...
...Behind him, another car swerved into his lane and crashed into the rear of his car...
...And late in 1980, nine Subaru owners brought a national class action suit against Fuji and Subaru in Sacramento...
...The car stopped on the freeway on my way to work one morning," said Paul Hurst, a Sacramento restaurant manager...
...These dealers are not the only ones keeping mum when customers ask about their gasket woes...
...Forbes magazine reported that the company was close to bankruptcy in the early part of the decade, after it first imported the Subaru 360 mini, a clunker Consumer Reports called unsafe for U.S...
...The motion of the engine then makes them knock against the head gasket, denting it and wearing it out until it finally disintegrates or just blows...
...Since they were what are called "wet sleeves"— that is, coolant circulated around them— they were attached to the engine block at just three pressure points...
...He assured me it was not a defect because I was the first person he said he talked to in regard to that problem," Hackett said...
...But even though Fuji knew this, like Subaru, it has never told Subaru owners about the head gasket failure risks they run, or about the warranty program...
...The FTC refused to allow Subaru thif extraordinary layer of confidentiality, and Federal courts denied Subaru's appeal...
...Subaru then dropped that tack and went ahead with an open petition opposing the information demands...
...about policies that encourage workers to tell supervisors about defective products...
...Pick a make of car at random, and chances are you will pick one out that comes off the assembly line with some sort of engineering defect...
...Perhaps they could be persuaded not to press their claims...
...But even more serious than the problem under Subaru's hood is the problem in the corporate suites, where the manufacturer and distributor have been less than candid with consumers—and apparently intend to stay that way...
...They also demanded a nationwide recall or preventive maintenance program...
...they suspected a poorly designed gas tank...
...But in general, automakers have claimed that secret warranties are a method of keeping customer loyalty and satisfying specific complaints...
...She wrote Subaru and on July 3,1978, received a reply from national customer relations manager Michael Rausenberger...
...Links also wrote to the National Highway Traffic Safety Administration (NHTSA) and the Federal Trade Commission (FTC) and found that other Subaru owners had been complaining about head gaskets blowing and sudden stalling...
...But he would not let The Progressive see their reports...
...That was the first year for which cars were covered by the secret warranty...
...But Links does say that what the experts found did nothing to change his mind: Bad design, he still maintains, helped cause Hirschberger's fatal crash, and could cause more accidents in the future...
...Unless a dealership notified its customers on its own initiative, a consumer could find out about the program only after suffering head gasket failure and complaining to the dealer or Subaru...
...When all is running smoothly, the head gasket acts the way a washer does in a faucet: It conforms to the surface irregularities of the cylinder head and the engine block, perfecting the seal between them and stopping leaks...
...He amended his pleadings, charging that the Subaru had a stalling defect that contributed to Hirschberger's fatal accident...
...Similarly, Fuji tried to keep the class action plaintiffs from suing it in the California courts...
...The only permanent remedy to head gasket failures may be complete engine replacement, according to Richard Marx...
...It is inexpensive and they don't have to repair everyone else's car...
...Putting all this together, Links looked at the rental company's records and learned that it had a history of trouble with its Subarus...
...James Osborne, a former assistant in the Sacramento District Attorney's Office and a plaintiff in the class action, is one such customer...
...Probably every car in this group has the propensity for premature head gasket failure," Richard Marx says...
...When you start them up and they go to running temperature, they heat up and the aluminum expands and when you shut it off, it cools and contracts," Hackett remembers being told...
...By 1980, Subaru had overtaken Mazda in sales and was being touted in Business Week as an ideal choice for institutional investors...
...One of his own mechanics was even having trouble with his 1976 Subaru...
...Hurst said his repair bill—never reimbursed—was $1,071.40...
...Some of the coolant was found elsewhere in the engine—in the air cleaner, in the carburetor throat...
...Everybody thought it was just their car," Links says...
...And whether the impetus came from Fuji or its American distributor is also unknown...
...and the agency franchising the rental company...
...Subaru officials may have been willing to tell Dave Peacock about the head gasket problem, but there have been no warnings or explanations to the public...
...Later in the year, Hackett said, the head gaskets went again...
...He told Mitchell that she did not change the oil often enough, noting that she had made only four oil changes in 31,000 miles of driving, instead of ten...
...Bruce Walda, a sales representative for a national publishing company who lives in Escondido, California, described his wife's near miss on the freeway: Subaru and Fuji knew of the head gasket flaw long before Hirschberger rented his car...
...I was in the right-hand lane and heard a noise like a backfire," he said...
...Marjorie Nelson, director of a home ec teaching program at Los Rios Community College District near Sacramento, said she had been stranded at least five times because of head gasket problems in her Subaru, one time at Donner Pass in California's Sierras in the middle of the night...
...For the dealer, the incentive for secrecy lies in the warranty itself...
...Subaru and Fuji knew about the auto's tendency to blow head gaskets long before Hirschberger signed his car out of the California agency...
...indeed, Subaru had set up a warranty program for head gasket repairs a year earlier...
...Subaru of America, which distributes Subarus in this country...
...A majority of Subaru's directors either sit on the Fuji board or are former employes and agents of Fuji, Marx says...
...The car had quit...
...Subaru's directors include the chairman of the board of Fuji...
...But nobody ever told Hackett that the same process might be involved in his head gasket failures...
...Subaru owners have been complaining that their dealers are doing just that...
...Fuji Heavy Industries, the Japanese manufacturer...
...Noting that owners of 1974 through 1976 model Subarus rated their cars' engines as worse and much worse than average mechanically, Consumer Reports included the cars under its list of "used car models to avoid...
...The manager blamed Osborne for not maintaining the car properly...
...As auto mechanics and traffic safety officials both understand, it is the rare car that leaves Detroit without bringing some form of trouble with it...
...The rental franchiser, Subaru, and Fuji agreed on $900,000...
...Margalit Hirschberger, Moshe's widow, and their son filed a $4 million suit against the driver of the other car...
...Companies had petitioned to keep their information secret before, but never had one tried to keep even the petition secret...
...Independent mechanic Dave Peacock, who has owned his shop in Diamond Springs, California, for eleven years, said he was puzzled about the number of Sub-arus coming in with head gasket problems until he talked to some Subaru factory representatives...
...In the automatic transmission Subaru introduced in 1976, and in later stick-shift models, the cylinders are not just attached at three points but permanently pressed into the engine block...
...American executives have flocked to seminars on Japanese management to learn about the kind of practices that should have kept an accident like Hirschberger's from happening: about guaranteed lifetime employment and liberal benefits that keep workers motivated...
...But Fuji failed to convince the Sacramento Superior Court that it had no jurisdiction over a Japanese company, and a subsequent appeal also failed...
...Research for this article was assisted by the Center for Investigative Reporting...
...There was clearly bad maintenance on the car, but there was also clearly a head gasket leak," he says...
...Later, when the car blew the head gaskets again, he took the car to another dealer who tried to blame Walda's wife, Carleen, for the engine damage...
...The car made Subaru one of the financial success stories of the past decade...
...Instead, Subaru notified dealers that a "special service program" was in effect for 1973 to 1976 model cars, beginning July 19,1977...
...He testified in a deposition that in October 1979, a regional distributor's service manager told him there was no implied warranty for head gaskets...
...Despite the FTC investigation, the consumer class action, and the settlement of the Hirschberger wrongful death suit, most owners of Subarus made from 1969 to 1976 are still unaware of the pattern of blown head gaskets in their cars...
...But by 1973, the company was in the black...
...With the cylinders and the engine block expanding and contracting at different rates each time the car warms up or cools down, the three attachments can weaken, and the cylinders come loose...
...But if the repairs are not made under the secret warranty program, the dealer is free to charge for more time at a higher price...
...Thanks to such tactics, the actual corporate purpose behind the secret warranty is still anybody's guess...
...If You Knew What Subaru Knew, You'd Blow a Gasket BY ALAN RAMO It was the summer of 1978, and Moshe Hirschberger, a thirty-four-year-old Israeli physician, had just completed a graduate fellowship at the University of California Medical School in San Francisco...
...And the Subaru's four-wheel-drive option set it apart from other Japanese competitors...
...In the eyes of some analysts, they provide a model for the revitalization of the sagging American industry...
...It states that "extensive testing by the manufacturer" showed that when the head gaskets are installed according to directions in the bulletin, there should be no more trouble...
...And plaintiffs' attorneys have been silenced by protective orders barring their release of information...
...If the work takes longer, the dealer loses the difference...
...Thousands of Subarus that may be susceptible to stalling and engine seizure are still on the road...
...Dealers were alerted to the head gasket defect and told that they would be partially reimbursed for any repairs they had to make...
...The FTC's confidentiality rules prevent its attorneys from telling what they have learned from Subaru about the defect...
...The FTC has begun a probe of the way Subaru handled its head gasket problem...
...In January 1981, Forbes rated Subaru first in return on capital invested, of all the American companies it evaluated...
...the local company renting the car...
...We believe it can be dangerous to human life if the cars are not recalled or effectively remedied...
...It is commonly held that these business practices set Japanese industry apart, at a level of quality control far higher than anything American automakers have achieved...
...This time, he talked to the dealer's service manager, who also said the problem was unusual, but gave him the telephone number of Subaru headquarters in New Jersey...
...Subaru responded by requesting permission of the FTC to file a secret petition opposing the demands...
...The rental company paid $400,000...
...It is very likely that the damage was caused by this lack of maintenance," he said, making no mention of the fact that Subarus had been having head gasket failure or that a replacement program was in effect...
...Thus, to Subaru, a secret warranty program represented enormous savings in dollars and in public confidence...
...On July 5, Hirschberger was driving the car in the second lane of a four-lane freeway near Livermore, California, when it suddenly came to a halt...
...Subaru's position was that the car had not been properly maintained, says Ralph Lombardi, attorney for Fuji and Subaru...
...Somehow, it had escaped from the radiator, yet the connecting hoses were free of leaks...
...Subaru sold more than 140,000 of the cars in question...
...alloy, riddled with holes like a slice of Swiss cheese...
...Bruce Walda said his wife had to call a number of dealers before one mentioned the program...
...Almost half of Subaru's stock is owned by Fuji—an aircraft manufacturer that diversified after World War II into such products as motor scooters, railroad locomotives, and, in 1958, automobiles...
...In February 1980, for instance, the FTC announced a precedent-setting settlement with Ford Motor Company in which Ford agreed to reveal its own secret warranties to its customers and stop using them in the future...
...Robert Hackett, aHayward, California, printing press serviceman, said in his deposition that his Subaru began to have head gasket problems in May 1977...
...But the facts surrounding Moshe Hirsch-berger's fiery death shoot a hole deep into that theory...
...Two years later, when the gaskets blew again, the dealer's mechanic told him it was an unusual case...
...The resulting silence may endanger the lives of Subaru drivers and their passengers today...
...A head gasket is a thin plate of soft metal Alan Ramo is an attorney in Berkeley, California, and a graduate student in journalism at the University of California in Berkeley...
...If you looked under the hood of a car, you would not be able to see the head gasket...
...But for Links, the central issue—what he calls "the morality of not warning people"—is still unresolved...
...Richard Marx, the San Francisco attorney representing the class action customers, says another Subaru owner, Josephine Mitchell, had to have her engine overhauled after the head gaskets blew...
...When the FTC began its investigation into Subaru's practices in 1980, it demanded information on head gasket problems for cars made since 1973...
...Nor was there any mention of the secret warranty program...
...The Subaru burst into flames and Hirschberger was killed instantly...
...When he tore the engine off and saw the extensive damage, he asked if Carleen was a hot-foot or if she abused the car, which I totally denied," he said...
...He scoffs at the claim that secret warranties are merely a good-will gesture...
...The highway patrol inspector concluded that the car had overheated and stalled because of a loss of coolant...
...He was told, though, that it could not be rebuilt because aluminum engines, once taken apart, never fit together again...
...A recent decision by the FTC upheld the substance of the investigation, but let Subaru hold back some documents...
...Sales climbed from $84 million in 1975 to $550 million in 1979...
...I don't think she put unnecessary strain on the car at all...
...The cost of publicizing and correcting a major defect in the successful Subaru would, of course, be high...
...Peacock said he has had no head gasket problems with these cars...
...Under its terms, a dealer who makes the head gasket repairs is reimbursed for only 6.1 hours of labor at a pre-set rate, no matter how long the repairs actually take...
...There was no sign of trouble until then, he said...
...That's when I realized something was wrong...
...The cost of publicizing and fixing a major defect in the successful Subaru would have been high, whether measured in dollars or public confidence Subaru's secret warranty bulletin details Fuji's direct involvement with the head gasket problem...
...Subaru, meanwhile, would have strong reasons of its own for keeping quiet about the head gasket failures...
...Any relevant correspondence between them would be hidden away behind the protective orders...
...The California Highway Patrol had examined the engine and, in a report filed with the court, stated that the radiator, which should have been full of coolant, was dry...
...But their attorney, Robert Links, wondered whether a different defect had been at play even before the crash...
...If it is taken apart, you'll never get the pieces together because they warp...
...The Hirschberger case is just a maintenance problem...
...The oil light went on and the car stalled...
...roads...
...Hot gases generated during combustion, at temperatures of about 5,000 degrees Fahrenheit in the typical engine, can escape from the cylinders and boil the coolant in the surrounding chambers, overheating the engine and causing serious damage...
...And since the warranty runs out after thirty-six months or 42,000 miles, it is tempting for the dealer to say nothing about the program until the customer no longer qualifies, then charge the full rate for service...
...Unfortunately, the engine block is made of aluminum, which reacts to heat differently than cast iron does...
...Subaru and Fuji, meanwhile, are resisting governmental and consumer legal actions on the head gasket cover-up...
...They charged fraud and deceit in the sale and servicing of 1969 to 1976 cars and asked for compensation for repair bills...
...Earnings per share climbed from $1.74 in 1979 to $2.95 in 1980...
...Hackett had hoped to get his engine rebuilt, thinking that would put an end to his head gasket difficulties...
...Nor could Links say much about the second inspection...
...One week before he, his wife, and their seven-year-old son were to return to Israel, he sold his car and rented a 1976 Subaru—the car advertised as "inexpensive and built to stay that way...
...After all, the Subaru is the creation of the Japanese auto industry, where workers and management cooperate, where layoffs are virtually unknown, where quality control is supreme—the envy of the world...
...Secret warranties have been under attack by consumer groups and state attorneys general for years as an illegal, deceptive practice...
...When you look at the dangers that one can be in—a single gal driving a car and the blasted thing breaks down and you are out—I think there is a lot of danger," she said...
...Those cars had cylinder sleeves—the inner linings of the cylinders—made of cast iron...
...We can't make that kind of thing available to the press," he says...
...Now crippled by a condition called "engine seizure," the car can go in seconds from top speed to a dead halt...
...indeed, Subaru had set up a secret warranty program a year earlier "She was in a bad situation," he said, "a dangerous situation, where she had lost the power completely...
...If the policy is not across the board," he says, "it is not much of a policy...
...According to FTC attorney Ralph Lindeman, it was an unprecedented move...
...Most likely, Subaru wanted to appease those people who were angry and brought their complaints to Subaru's attention," says Marx...
...All the stories were the same...
...Because its cars are built in Japan by Fuji, Subaru was able to avoid the heavy capital commitments a manufactuer would ordinarily have to make, yet still ride high on the wave of demand for small autos...
...I veered off the road down an off ramp, and then the car locked up...
...Worse yet, if the fluid flows beyond the cylinders to the crankcase, where it will mix with and break down the oil that lubricates the engine, so much heat can develop that the car's moving parts begin to weld themselves together...
...about exchanges of information and research between manufacturers and parts suppliers that encourage interdependence and let the manufacturer reject substandard parts more readily...
...Subaru describes Fuji in filings with the Securities and Exchange Commission as its parent company...
...Subaru, claiming confidential business information would be given away if evidence in the case were made public, sought and obtained a protective order that forbade Links to describe his experts' reports...
...In the last three years, he has had to repair some twenty or thirty older Subarus for blown head gaskets, and to replace the entire engines in about a dozen more...
...Peacock said that the factory people told him the problem lay in the design of the cylinders in Subarus built before 1976...
...At one point, Subaru had a loss of $3.7 million, according to Business Week...
...Subaru national public relations director Frank Guilianelle says his company's inspectors found no problem...
...Or coolant can flow into the cylinders, where it quickly thwarts combustion, locking the engine and stalling the car...
...But the trouble the Subaru brought raises more than the usual product safety questions...
...The flaw may even be life-threatening...
...The family alleged that a product defect had contributed to Hirschberger's death...
...Experts from both sides took another look at the rental car's engine...
...the car quit was under construction, so she had to negotiate over a dirt area and pull off to the side of the road to get off the freeway and out of traffic...
...The secret warranty program was set up under the auspices of Subaru, but Fuji is far from a disinterested spectator...
...In fact, some say the company actively tried to keep them from finding out about it...
...The results were consistent with a blown-out head gasket," says Links...
...But when a head gasket blows, the seal is broken...
...Hackett called and eventually talked to someone identified as a vice president, who also told him that the trouble was unusual and that his was the first call Subaru had received about head gaskets on any Subaru model...
...But dealers were not required to tell Subaru owners...
...Even then, many consumers were not told about the repair program...
...The parties settled out of court on June 10,1981...
...But they also decided to keep the warranty program, and word of the defect, a secret...
...The driver of the car agreed to pay the Hirschbergers $25,000...
...It is a good way to satisfy an owner who is persistent and vocal," says Dick Tupper, a staff member for the Center for Auto Safety...
...Three previous renters had complained about stalling and exchanged their cars...
...She had to slow down, people would almost ! rear-end her, and then, the section where...
...One company official said the agency had problems with all its Subarus...
...The dealers, the distributor, and the manufacturer all have a strong economic interest in keeping word of the head gasket problem—and the recourse grudgingly offered—among themselves...
...Evidently, the same pressures that would keep an American automaker from telling buyers their cars might be unsafe are felt strongly in Japan, our model for a "human" capitalist society...
...it is sandwiched tightly between the engine block and the cylinder head, which covers the cylinders, where air and gas are burned to power the car...
...Manufacturers are aware of potential class-action lawsuits...
Vol. 46 • March 1982 • No. 3
