Resale of ‘Lemons’ as New Cars Criticized
New cars that normally would be classified as “lemons” are being resold to unsuspecting buyers, and the head of the Assembly’s Consumer Protection Committee wants the practice stopped.
“In brief, the manufacturers are packaging their lemons as peaches,” said Assemblywoman Jackie Speier (D-Burlingame), the committee’s chairwoman. “Only the fruit, in many cases, is rotten.”
Speier and other committee members heard Thursday from disgruntled car buyers who complained about buying nearly new cars from dealers only to find out later, after a run of constant troubles ranging from squeaky doors to bad brakes, that the vehicles had a history of problems.
Although California has a so-called lemon law, Speier said there is a loophole.
Under state law, a new car is declared a lemon if it cannot be fixed after several attempts. The buyer is given a replacement. The car labeled a lemon can be resold by the manufacturer, but only after it has been repaired and its title changed so that future buyers know it was a lemon.
But the problem, the committee was told, is that some manufacturers are buying back the faulty autos before they are officially listed as lemons and reselling them without telling buyers about their history.
A woman told the committee that she bought a 1989 Chevrolet Suburban from a Santa Rosa dealer and that its brakes failed while pulling a 6,000-pound trailer down a mountainous Lake Tahoe road. Gayle Pena told the committee that she was led to believe that she was buying a like-new vehicle that had been driven by an executive.
She later found out that the vehicle had been repurchased from the original owner by the dealer after it had been in the shop at least 20 times for brake problems that could not be fixed.
“The dealer was willing to kill us for $22,000 . . . put us in a casket for the sake of a sale,” said Pena, who now lives out of state.
Pena said the Department of Motor Vehicles penalty for the dealer who sold her the truck was “a slap on the wrist” consisting of a small fine and having to close for two days, which has not been done yet.
Representatives of General Motors, Ford Motor Co. and Nissan North America Inc. were at the hearing and indicated that they would support full disclosure. They also urged passage of a uniform federal law to help iron out differences among lemon laws in various states.
“We believe in full and effective disclosure,” said Ken Tough of General Motors. “We want the customer to make an informed decision.”
A committee report recommended legislation to require the DMV to regulate the buyback procedures. The legislation, which Speier said she will introduce, would require the repair of all vehicles described as lemons before their resale and would require that records of the repairs be given to prospective buyers.
