Chrysler Is Accused of Reselling ‘Lemons’ : Autos: DMV says vehicles were passed off to unwitting consumers in Northern California. The company disputes the findings.

A California state agency has accused Chrysler Corp. of reselling “lemons” to unsuspecting buyers without telling them it had repurchased the cars from previous owners because of defects.

The Department of Motor Vehicles said the allegations involve 118 Dodges, Jeeps, Chryslers and Plymouths sold to consumers through dealerships in Northern California. The model years are 1989 to 1992.

A Chrysler spokeswoman on Wednesday denied the allegations, saying the auto maker is in full compliance with California law and disputes with the DMV’s findings.

“We feel we have evidence that we have made full disclosure and we have a meeting set up with the DMV to go over the material,” spokeswoman Rita McKay said. She declined to give further details.

If found guilty, Chrysler faces possible revocation or suspension of its license to sell cars in California, though a fine is considered more likely. General Motors Corp. paid $330,000 in April to settle similar charges, while denying any intent to defraud or mislead consumers.

The DMV said its investigation shows that Chrysler delivered most of the repurchased vehicles to a Northern California auction house, which then allegedly resold them to auto dealers. The dealers then allegedly sold the cars to consumers. The dealers and the auction house have not been charged.

A new car is considered a lemon in California if its defects are not fixed within four attempts or after 30 days in the shop during the first year of ownership. Car owners can sue manufacturers to force them to repurchase a car.

The Center for Auto Safety, a Washington-based advocacy group, estimates that about 50,000 lemons are repurchased nationally each year. While it isn’t known how many of them are then resold, consumer groups have called for closer monitoring of the vehicles.

Motor Voters, a Sacramento consumer organization, argues that cars with serious mechanical defects should be sold for scrap only.

The nature of the defects involved in the Chrysler case couldn’t be learned Wednesday. Consumer advocates said that in general, auto makers repurchase cars only if problems are serious and beyond repair.

“Usually the ones they buy back are the worst ones--the ones they can’t repair. But if the manufacturer can’t fix it, how can anyone else fix it?” asked Rosemary Shahan, president of Motor Voters.

The DMV made the allegations against Chrysler on Aug. 17 in an administrative filing. It did not become public until Wednesday, when Motor Voters obtained a copy.

The charges will be heard by an administrative law judge, who will recommend a decision to Department of Motor Vehicles Director Frank S. Zolin, who may accept or reject it or render his own decision.