Recently purchased a new car?
With RACV Insurance, you're protected by Victoria's most trusted insurance.
Occasionally, motor vehicle buyers will find they have purchased a 'lemon' - a car that isn’t fit for purpose. How do you know if you've bought a lemon, and what can you do about it?
When life gives you a lemon, seek lemon-aid.
Australia, unlike the USA, doesn’t have a specific “lemon law” but a raft of legislation does protect buyers of both new and used vehicles.
There is no legal definition of a “lemon” in Australia, but the 'pub-test' defines a lemon as a product with a persistent defect that prevents it from living up to expectations.
In other words - the item doesn’t do the job it’s meant to do. This applies to both new and used vehicles. It’s not that the type of product is inherently bad, you’ve just (unluckily) received a poor example of it.
Help is at hand, however, in the form of the federal Australian Consumer Law and, in Victoria, Consumer Affairs Victoria (CAV).
CAV reports it received 2,804 contacts related to used car sales by licensed motor car traders in 2021-22, compared to 2,581 in 2020-21, and 3106 in 2,019-20.
“If you do purchase a vehicle that doesn’t work, you are entitled to a refund, replacement, or repair under the Australian Consumer Law - regardless of whether the vehicle is new or used,” said a CAV spokesperson.
“We take breaches of motor car trading laws very seriously and will take action where wrongdoing is identified.”
All new vehicles are required to comply with Australian standards and most brands are covered by a five-year (or longer) warranty.
BMW/Mini is the only hold-out in the major mainstream ranks and persists with a three-year warranty.
Essentially, buyers will first approach the dealership under a warranty claim. If the dealer is then unable to repair the problem, or it becomes an ongoing issue, owners can be granted a refund. If that is refused, buyers can seek redress through the courts under the provisions of consumer law.
Australian Consumer Law takes precedence and may still apply even if a vehicle is out of warranty.
According to business.gov.au, “a business’s warranty can’t override the consumer guarantees. For example, if a product suffers a failure outside a warranty period, it may still be covered by consumer guarantees.”
“If you’re a supplier or manufacturer and provide such a warranty, under the ACL you must comply with that warranty. If you fail to comply with a warranty, consumers have rights against you under the consumer guarantees.”
In Victoria, there is also a statutory warranty for second-hand vehicles. If the vehicle is less than 10 years old and has travelled less than 160,000km, buyers are entitled to a three-month/5,000km warranty.
The caveat here, is that warranty only applies if you are buying a vehicle from a licenced motor car trader, so it explicitly doesn’t apply to private sales.