Defects In A New Vehicle
If something goes wrong with a new vehicle, the buyer has remedies available under the manufacturer’s warranty as well as automatic guarantees under the Competition and Consumer Act 2010.
Schedule 2 of the Act is dedicated to Australian Consumer Law, which states businesses must guarantee their products or services, irrespective of other warranties that may be offered. If a business fails to deliver a guarantee, a consumer has a right to a repair, replacement or refund; to cancel a service; and/or to compensation for damages and loss.
Guarantees apply to vehicles that cost up to $40,000. Vehicles must be safe, lasting, have no faults, look acceptable and be fit for purpose. They must also match the description provided in advertising or the demo model, and have spare parts and repair sites available.
These guarantees will not apply if the consumer misused the vehicle and caused the problem, or knew of the problem before they bought the vehicle.
If a guarantee is not delivered, the type of remedy available to a consumer will depend on whether the vehicle failure is major or minor. A major failure is when:
- the person would not have bought the vehicle if they had known about the failure;
- use of the vehicle creates an unsafe situation;
- the vehicle is significantly different from its description;
- the vehicle is broken and cannot be repaired easily;
- the vehicle is not fit for purpose.
In the problem is a major failure, a consumer has the right to ask for a replacement vehicle or refund. A replacement vehicle must be identical to the original, and a refund should be the amount paid, in the form it was paid.
If the problem is a minor failure, a business can choose to offer a free repair instead of a replacement or refund, and the consumer must accept the free repair. The problem must be able to be resolved within a reasonable time.
A buyer may also be able to seek “reasonably foreseeable” damages for any loss or damage caused by the vehicle supplier, or in some cases from the manufacturer.
Information about these remedies should be provided to the buyer at the point of sale.
Manufacturer and extended warranties
Manufacturer warranties apply for a specific time from purchase, and can range from 3 years or 100,000 kilometres of coverage, up to 7 years or unlimited kilometres. The warranties typically cover mechanical failures resulting from faults or defects in vehicle design or parts. They limit what is covered to safety, reliability and roadworthiness problems, and not cosmetic damage or normal wear and tear.
Manufacturer warranties usually allow the vehicle buyer to choose their preferred repairer as long as manufacturer’s standards for maintenance and servicing are met. However, some manufacturer warranties require the buyer to have the car serviced or repaired through their dealer network. A manufacturer may void a warranty if the vehicle service schedule is not maintained, if inappropriate work is carried out on the car, or if a non-genuine part has failed or caused damage.
If the vehicle is sold while it is still under a manufacturer warranty, the remaining warranty period automatically transfers to the new vehicle owner.
An extended warranty has a similar structure to an insurance policy, with an excess payable and claim limits. These warranties may contain terms and conditions for vehicle use and servicing. An extended warranty from a manufacturer is sometimes offered as a bonus at the time of sale. An extended warranty from a dealer may come at a price.
An extended warranty is not usually transferrable if the car is sold.
If contacting the dealer or manufacturer does not resolve a problem, a buyer can contact their state or territory’s consumer protection agency to discuss their rights and options. Each state or territory also has a small claims tribunal to handle complaints. In regards to servicing, to ensure a dealer’s service centre is reputable, a vehicle buyer can contact the Motor Traders Association in their state.
The Australian Competition and Consumer Commission can provide information about consumer rights and possible remedies to a dispute, but it does not help resolve complaints.
If you require advice or representation in any legal matter, please contact Armstrong Legal.