27th July, 2015 · Policy Viewpoint

When Life Gives Us Lemons, Do We Need
Lemon Laws?

3 minutes to read

It’s a contentious topic that’s sweeping Australia; whilst introducing lemon laws may have merit, singling out the automotive industry does not
Lemon laws are intended to protect consumers with cars that have had multiple faults or exceeded a set number of days in the workshop because of repairs. When these limits are exceeded, manufacturers are forced to offer customers a new replacement or refund.

Whilst lemon laws do not currently exist in Australia, we have been historically protected by Australian Consumer Law (ACL) – the sweeping legislation that helps ensure shoppers are treated fairly when consuming goods and services.
Yet now, many voices across the nation are calling for added protection. The movement has been spearheaded by a number of people and events, including last year’s infamous Destroy My Jeep campaign. Disgruntled Jeep customer Ashton Wood, who had appealed to Fiat Chrysler to replace his car, ultimately destroyed it – as part of a major awareness campaign.

Queensland Attorney-General Yvette D’Ath is another prominent figure calling for Australian lemon laws, recently stating:

‘I’ve heard some shocking stories where year after year, sometimes five years, where the car’s still going in for a month at a time being repaired and yet the Dealer’s not willing to replace the vehicles.’

Ms D’Ath, who believes ACL does not provide enough protection for new car buyers, has set up a forum for people to provide their own personal (negative) experiences.

‘Certainly I’ve heard many stories that people do not believe the Australian consumer law is adequate enough to protect them and there has been a call from some in the community for lemon laws similar to the United States,’ she said.

Buying a new car is an emotional purchase. For many shoppers, their car is a great source of pride, something that often represents conscious saving and sacrifice and which is expected to provide years of faultless service.

However, just like whitegoods, electronics, marine equipment and products from any other industry – sometimes components fail, and most of the time they can be easily repaired.

With this mind, AADA believes that if the Government wishes to legislate lemon laws, they should cover the entire retail industry – not only automotive.

‘Any proposals should not be limited purely to cars – they should apply to other goods, from farming equipment to household appliances’, says AADA Policy Director, Michael Deed.

However, as is often the case, the automotive industry and particularly its retail arm, are portrayed as culprits.

‘Automotive dealers are an easy target,’ says Former AADA CEO Patrick Tessier, ‘however what many people don’t understand is that the decision to refund or replace a vehicle is something that is made at a manufacturer level. In serious situations where a car needs major or multiple repairs, Dealers look to their manufacturer for direction, and the manufacturers work within ACL guidelines.’

Whilst lemon laws do not currently exist, in almost all cases ‘common sense prevails’ – a point made by Tessier:

‘Nobody enjoys the inconvenience that product faults cause. And sometimes we can be particularly unlucky. In the case of automotive, common sense will prevail. And the fact is that in serious cases where a car’s safety is jeopardized, a manufacturer will replace it.’

However if lemon laws were to be legislated, clear and fair guidelines for what constitutes a ‘lemon’ will be critical. For example, a pain point for many Dealers is the ‘loss of faith’ some drivers experience after a major fault in their car.

Some customers demand a new car after an isolated component failure, like a gearbox. Though it’s a significant malfunction, after replacement, the car remains in perfectly safe and useable condition.

There would be no logical reason to replace a car in this scenario, other than to appease the consumer who has developed a false perception that the entire vehicle is faulty.

According to AADA Chairmen Ian Field, cars built today are far better in quality than their predecessors.

‘New cars are more reliable now than they have ever been – it’s no coincidence that some manufacturers are offering warranties as long as seven years. Yes, sometimes things go wrong, but it would be unreasonable for consumers to expect replacement vehicles at the drop of a hat.’

Moving forward, a review of dealership agreements may be required to clarify liability and responsibility.  In any case, Dealers will work within the law to ensure that consumers experiencing difficulties with their cars receive assistance in-line with their rights.

Whether that includes lemon laws is yet to be seen, but this is an issue that will be followed closely by Automotive Dealer.