Lemon Laws in Australia & Your Rights as a Car Buyer

Lemon Laws in Australia - Car buying

If you have ever had the frustration of buying a new product that’s faulty or doesn’t perform as expected you can no doubt sympathise with anyone who goes through that experience with a new car purchase. While a range of consumer protection rights are already in place, the rights of new car buyers in Australia may soon be bolstered with the introduction of a proposed lemon law.

This article looks at an overview of the lemon law as well as your existing consumer rights as a car buyer in Australia.

What is the Lemon Law?

In general, it caps the number and types of problems acceptable with a new car, and what chances a dealer or manufacturer should be given to fix a problem. The law looks at how much time a car spends in the repair shop rather than on the road and if a car has excess faults or requires ongoing repairs or fixes. When one of these limits is breached, the car earns the title of “lemon” and the owner can claim a replacement or refund from the manufacturer or dealer.

Currently, you won’t find lemon laws in Australia when it comes to cars. However, there are currently proposals in play to introduce lemon laws for new car purchases. The results of the review regarding whether Australia should introduce lemon laws for cars may take many months to resolve but for now if you’re a dissatisfied car buyer, you may turn for redress to the Australian Consumer Law.

Australian Consumer Law already has laws to protect new car buyers — and buyers of certain used cars for that matter — from defects that deny buyers the benefit of their car deals.
Think of the Australian Consumer Law as including a car buyer’s “bill of rights”, which consist of certain guarantees that manufacturers and suppliers are required to make on each vehicle. You also have rights as a customer for acceptable quality and reasonable performance expectations to be met.

What is Acceptable Quality for a Car?

If you purchase a new car in Australia you are entitled to a car that is fit for the normal and customary uses of that kind of car, acceptable in its looks and finish, free from defects, durable, and safe.

Something to be aware of though is that you don’t get a guarantee of “acceptable quality” if a dealer reveals a defect to you before you buy and this is of particular importance when purchasing a used vehicle. You’re not stuck though with a hidden fault, or one you can’t easily detect and is not explained to you, such as a problem with the engine, gear box, or brakes.

What are Reasonable Expectations for Car Performance?

If you buy a car which is advertised and sold as a four-wheel drive for off road driving, you can reasonably expect it to perform off-road. A passenger car without four-wheel drive though, will still be considered to have acceptable quality even if you can’t take it for a spin off the beaten path. Likewise, you cannot complain about a hatchback that won’t pull a large caravan or a horse float. The owner’s manual or operating instructions can help you determine whether you are making “normal” use of the car.

Specific Representations from a Manufacturer or a Dealer

You have the right for the car you buy to match what the supplier or manufacturer specifically tells or shows you about it. This includes statements, warranties or presentations in a television spot or catalogue, sample or demonstration car; or literature. For instance, if a salesperson lets you test drive a diesel-driven car, your car buyers rights are violated if the car you are supplied runs on a petrol engine instead. Another example that would be a violation of Australian Consumer Law is a dealer selling you a car that can’t tow more than 1,000 kilograms without overheating, even though the sales literature or advertisement praises its 3,000+ kilogram towing capacity.

Consumer law is also in place to give you protection if you tell a car dealer your purpose for buying the vehicle or how you plan to use it, and they knowingly offer you a vehicle that doesn’t achieve it. This can arise if say, you tell the salesperson you plan to tow a 2,000 kilogram boat and trailer combo, but the supplier sells you a vehicle that can’t tow such a load without damage to the vehicle.

Extended Warranty Options?

A supplier may offer you an “extended warranty,” which covers your vehicle after any original warranty period ends. Sometimes you may have an option to pay extra for that warranty. However, an extended warranty doesn’t cost you car buyers rights under the Australian Consumer Law. A dealer can’t use the extended warranty as a substitute for the guarantees the law already affords you or otherwise force you into an extended warranty to cover rights you already have.

Addressing Major and Minor Failures

Under the Australian Consumer Law, your redress for not getting what you’re guaranteed depends on whether the problem is a “Major Failure” or “Minor Failure.”

Major Failure

A major failure relates more to how quickly the problem can be rectified rather than the failure itself. A Major Failure exists if the part or problem can’t be quickly rectified i.e. a gearbox problem where the gearbox completely fails you would think would be a Major Failure however if it can be replaced or rectified quickly it falls under the scope of a Minor Failure. If the gearbox however can’t be quickly repaired or replaced i.e. it takes 3 months to source another one, the problem then falls under a Major Failure. If a Major Failure exists you as the consumer have the right to determine how the situation will be resolved either by replacement, refund or repair. The supplier must replace your car or refund your money if the failure is major. In a major failure, you can keep the car, but demand the difference in the value of the car as it is and the value it would be if it met the guarantee. Major failures can also exist when a reasonable buyer in your shoes would not have bought the car if the problem was fully revealed or when the car doesn’t conform to a specific representation or promise about the car or its performance.

Your defect falls in the “minor failures” category if the supplier or manufacturer can fix it within a reasonable time. Under a Minor Failure scenario the supplier has the right to determine how the situation will be rectified i.e. replacement, refund or repair. Expect matters such as windshield wipers or transmissions that can be easily replaced to fall within this category. However, according to Motor vehicle sales and repairs: An Industry Guide to the Australian Consumer Law, you can claim a Major Failure if the supplier says it could be fixed in one to two days, but the problem is not fixed after eleven weeks. It therefore , was not remedied within a reasonable time and, therefore, is a “Major Failure.“ Where your defect constitutes a “Minor Failure,” you won’t get far demanding a replacement vehicle, refund, or diminution in value — at least initially.

You get to choose who fixes any failure that involves a consumer guarantee provided by the Consumer Law. The manufacturer or supplier can’t void or threaten to void a guarantee because you choose someone other than the manufacturer, supplier, or someone in their network or “approved provider” list to fix your problem.

Buyer’s Remorse

Australia does not have a national law that allows you to back out of a purchase because you don’t want the car, find something more to your liking, or you otherwise catch “buyer’s remorse”. However, your state or territory might impose a cooling-off period, in which you can during that period cancel a transaction and get your refund — no matter the reason. If that might even be a remote possibility for you be sure to ask the supplier while you’re shopping if they offer a “change your mind policy.” If so, you might have a case to change your order so long as you follow the directions of the policy.

For more information on your rights as a car buyer check the “Motor vehicle and sales repairs: An Industry Guide to the Australian Consumer Law” referenced earlier in this article. Your state’s or territory’s consumer protection agency also can explain or refer you to laws to protect new car buyers.

The Best Case Scenario – Limiting Risk

Of course, even with consumer law protections in place, going through the time and hassle of replacing or repairing a vehicle is still an unwanted experience. It’s also worth noting that not all dealers and car manufacturers offer the same after sales care and service experience. That’s why it’s worth doing your due diligence on any car purchase and car dealer – even with a new car purchase.

If you want peace of mind with your purchase but researching the right car for you and/or the right place to buy doesn’t sound like your thing there is an easier way. Our team at Car Search Brokers provides independent, expert advice on not only the right type of vehicle for your needs but also where to buy. We can assist with negotiating and facilitating a hassle free purchase of a new or used car from a dealer or through private sale depending on your needs. Get in touch today for more information on how we can assist you.

Disclaimer: The information in this article is general in nature and should not be used to replace legal advice about your own position in relation to anything mentioned in this article.

Posted on September 13, 2016 in Car Buying Tips