THE GOODS : Changes in Lemon Law Leave Sour Mood

California lawmakers approved legislation last week that appears to weaken the state’s already modest protections for automobile buyers who have the bad fortune to get stuck with a lemon.

As the number of court and arbitration cases involving lemons has increased in recent years, a parallel problem has risen: What to do with the thousands of cars that manufacturers buy back from consumers?

Under California’s existing law, those lemons are supposed to be branded on their titles, allowing future used car buyers to know that they are buying defective or damaged goods. But in practice, auto manufacturers buy back thousands of cars and do not brand the titles, arguing that they are not buying back lemons but simply making goodwill gestures to customers who are dissatisfied with perfectly good cars.

The California Department of Motor Vehicles, which doesn’t accept this logic, has charged that General Motors and Chrysler laundered lemons and resold them without branding the titles. GM settled its case, while Chrysler is fighting it. DMV has made the tough--though unlikely to succeed--proposal to bar Chrysler from doing business in the state for 10 days.

Under state law, a car is considered a lemon if a dealership holds a car for repairs for more than 30 days in the first year of ownership or if the dealer is unable to repair a problem after four attempts. The new legislation was supposed to clarify the regulations that created this mess, but it has left the situation every bit as confusing as before. The manufacturers would continue to have wide discretion in which vehicles get branded and which ones don’t.

“What this bill does is repeal the prior act on branding and replace it with a new weaker one,” said Rosemary Shahan, a Sacramento consumer activist and head of Motor Voters. “It is weaker because [legislators] put in language giving [manufacturers] more leeway in what must be branded.”

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The American Automobile Manufacturers Assn. has asserted that its members should have to brand only those cars found to be lemons in court proceedings, which represent just a tiny fraction of the cars bought back from owners.

Bernard Lu, a DMV attorney, said the agency believes that every car bought back after a consumer protests about defects should be branded, whether that protest was made in an arbitration case, a letter by an attorney or a formal court case.

The DMV estimates that 5,000 to 10,000 used car owners in California are stuck with models that were never properly identified as lemons when they were purchased at used car lots and auctions. Lu said the state plans to notify the owners, but so far the auto makers are not fully cooperating in helping the state identify the cars.

Ford has done the most to comply, submitting a list of several thousand cars it repurchased. Chrysler is withholding its data as part of fighting its suit with the DMV. GM has never formally been asked for the data, though it did settle DMV charges that it failed to brand 77 lemons, Lu said.

Phillip D. Brady, general counsel for the American Automobile Manufacturers Assn., said in a letter to DMV officials earlier this year that branding the 10,000 titles now would cause owners of those cars to lose tens of millions of dollars in value with no benefit to the public.

Consumer advocates, however, say that notifications would allow owners to seek compensation from the manufacturers and dealers, just as some consumers have already done in cases where they discovered on their own that their car had been subject to a lemon buy back.

One victory for consumers in the legislation, which is now awaiting Gov. Pete Wilson’s signature, is that the branding language required on titles is clearer.

In the past, the state required titles to be branded with the arcane term “warr. ret.” --an abbreviation standing for warranty return.

Now, the titled must read “Lemon Law Buy back.” No mistaking what that means.

* Vartabedian cannot answer mail personally but will attempt to respond in this column to automotive questions of general interest. Do not telephone. Write to Your Wheels, 1875 I St. N.W. #1100, Washington, D.C. 20006.