Lemon Law: What Happens if You Buy a Lemon Car in Australia?

Broken Down Car W Copy

Let’s cut straight to the chase: Australia does not have a Lemon Law to protect car buyers against duds that should never have been retailed. Yes, there are factory warranties and the ACCC with its Australian Consumer Law framework has a weapon to help protect us. But an actual lemon law that can be rigidly applied to dodgy cars? Nope.

The whole notion of a lemon law began in the USA in the 1960s when consumers figured they needed to be able to fight back when a carmaker turned their corporate back on a problem-child car. The term lemon law was coined about then and refers to the term `lemon’ which, since about the 1900s in the US, has meant `something worthless’.

In Australia, we simply haven’t pushed consumer protection laws as far as a blanket set of rules for determining when a car should be taken back by the manufacturer and the buyer have their money refunded.

Yes, there have been movements over the years to push for such a set of laws and rulings, but it hasn’t happened yet. And even if it did become reality, there’s a very real possibility that it would be state and territory based. So instead of the new car lemon laws Australia, you’d wind up with the lemon laws NSW or the lemon laws Victoria (and so on) which would be confusing and less effective than they might be. But that’s the Australian system of government for you.

So what does happen if you buy a car that isn’t up to snuff?

Well, the first step is to approach the dealership and, therefore, the car’s manufacturer to apply the new-car warranty to make it right. Of course, sometimes, the carmaker just can’t get the thing to work properly, and that’s when Australian Consumer Law (ACL) starts to kick in.

The ACL on the subject defines a vehicle with a ‘major fault’ as follow:

“A reasonable consumer would not have bought the motor vehicle if they had known about the full extent of the problem. For example, no reasonable consumer would buy a new car with so many recurring faults that the car has spent more time off the road than on it because several mechanics have been unable to solve the problem.

“The motor vehicle is significantly different from the description, sample or demonstration model shown to the consumer. For example, a consumer orders a car with a diesel engine after test-driving the demonstration model, but the car delivered has a petrol engine.

“The motor vehicle is substantially unfit for its normal purpose and cannot easily be made fit within a reasonable time. For example, the engine of a pick-up vehicle, with a stated towing capacity of 3500 kilograms and normally used for towing, has a design flaw that causes it to overheat when it tows a load of more than 2500 kilograms.

“The motor vehicle is substantially unfit for a purpose that the consumer told the supplier about, and cannot easily be made fit within a reasonable time. For example, a sports utility vehicle does not have enough towing capacity to tow a consumer’s boat, despite the consumer telling the supplier the boat’s specifications.

“The motor vehicle is unsafe. What is ‘unsafe’ will depend on the circumstances of each case. For example, a truck has faulty brakes that cause the vehicle to require a significantly greater braking distance than is safe for normal use.”

Now, should a car fall within those definitions, theoretically, the customer can request a refund for the full price paid for it. The consumer can also ask for a replacement vehicle and even compensation for any losses. There’s no guarantee the manufacturer will accept this and may seek to argue the toss over whether the car falls under the ACL’s definition of a `major fault’ but it’s about as good as your protection is going to get.

Although there’s no specific lemon clause for used cars within that ACL, the ACCC does have a say in how used-car buyers are protected, and these laws form the basis of most used-car warranties offered by licensed car dealers. In most cases, the laws stipulate a statutory warranty that covers a private buyer against defects for the first 5000km or three months. That’s dependent on the car being less than 10 years old and having travelled less than 160,000km when it was purchased. And if it’s a ute or other commercial vehicle, there’s no warranty at all in most cases.

If you think you’ve been stuck with a lemon car, it all comes down to what to do next. Firstly, make sure every exchange between you, the dealer and the carmaker is in writing. Then, hold your experience up against the ACL’s definition of major faults and see if you get a match. After that, it’s time to contact the ACCC, but remember that you have to give the car’s manufacturer and its dealer a fighting chance to put it right first. You should take it all the way to the manufacturer’s customer service department at head office level before involving the ACCC.

For the record, the US lemon laws are pretty simple by comparison. Although they, too, vary from state to state, the basics are similar. That is: If the carmaker has made two attempts to fix a warranty problem that is serious enough to cause death or injury, or any other problem four times, and failed, or if the vehicle has been out of action for 30 days total during the warranty period, then the owner has a right to a full refund or replacement vehicle.

Seems reasonable, but don’t hold your breath waiting for similar legislation to come to Australia.

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