Mint? No, it may be lemon

When Henry Johnson leased his Mercedes-Benz, he recalled that the dealer assured him the used S340 sedan was in such mint condition it had earned the manufacturer’s prestigious “Starmark certified pre-owned” label.

But his beloved $62,000 leased Mercedes ended up as an expensive ornament in his Chino Hills driveway, he later alleged in a suit.

Less than a year after he took out a 60-month lease in 2001, he says he discovered the car had been in a serious accident in Florida, resulting in major frame damage.

Johnson had relied on assurances that his Mercedes had undergone a rigorous inspection at Fletcher Jones Motor Cars Inc. in Newport Beach. The Mercedes program is similar to ones offered by dealerships of almost every major brand.

Certified programs have become so popular and resulted in so many consumer complaints that the state Legislature is considering a new law that would be the first in the nation to regulate the practice and define what constitutes a “certified” car.

The idea is to take the guesswork out of buying a used car and prevent consumers from being burned by cars that come with pre-existing defects.

The programs became popular during the mid-1990s, as the trend toward new-car leasing flooded the market with used cars. The number of certified vehicles being sold nationwide has jumped dramatically from 452,829 in 1997 to 1,160,707 in 2002, according to market researchers.

Manufacturers say that the inspection programs cover 100 to 300 items in the cars, ranging from the transmission’s performance to the condition of the upholstery.

At best, even top mechanics cannot assure that a car will not develop a problem soon after it is driven off the lot.

At worst, the inspections do not catch existing problems, even ones that represent serious mechanical and safety defects, consumer advocates say.

Rosemary Shahan, executive director of Consumers for Reliability and Safety, said buyers are often given false assurances by certified used-car programs.

Of course, the manufacturers do not inspect cars. That is left to dealerships, which also administer the warranties that are offered on certified cars.

A certified car carries a hefty cost premium, anywhere from 10% to 30% above a non-certified car. That covers the extended warranty that dealers provide for certified cars, as well as some kind of peace of mind that the consumer is supposed to have upon exiting the used car lot.

That peace of mind quickly deteriorated for Johnson.

Johnson says he “couldn’t afford a new Mercedes ... but I wanted the luxury,” so the 32-year-old electrical contractor took out a five-year, $62,000 lease on a pre-owned 2000 Mercedes S340 sedan.

The problems started less than a year later, when his tires began to wear out prematurely and require repeated alignment, Johnson alleges in a lawsuit filed in Superior Court.

Robert Brennan, Johnson’s attorney, said the car had been in an accident in Florida in 1999 and then returned to a North Dakota dealer. Fletcher Jones purchased the car wholesale from the North Dakota dealer and then leased it to another customer before it ended up with Johnson.

The suit alleges that Fletcher Jones knew the car had been in a serious accident and never disclosed the problem to Johnson, a contention in sharp dispute.

Howard Miller, an attorney representing Fletcher Jones, confirmed the Mercedes had frame damage from a prior collision but said it was not detected during its certification inspection.

Miller said the frame damage was hidden under the engine and that the North Dakota dealer that sold the used car to Fletcher Jones did not disclose the problem. Such problems are highly unusual in the dealer’s program, Miller said.

Miller and Brennan said that, in the last week, they have agreed to settle the case under terms that will not be disclosed. Because an expert warned the car was unsafe to drive, the Mercedes is sitting in Johnson’s driveway and he has continued to pay $1,300 per month on the lease.

Carmakers say they are trying different tactics to help ensure that certified inspection programs live up to their billings.

Toyota has a 163-point inspection program and attempts to investigate a car’s title history to determine whether it has ever been in a serious accident that has resulted in a total loss.

The company also makes surprise checks on dealers to make sure certified inspections measure up to Toyota’s standards, said Norm Olson, national sales manager for Toyota’s certified used vehicle program.

“You don’t want to put garbage out there,” Olson says.

But Assemblywoman Cindy Montanez (D-San Fernando) is sponsoring a law supported by consumer advocate Shahan to place new rules on the industry’s certification programs. If passed, the law would define for the first time all the steps that a dealer would have to take before claiming a car is certified.

Times staff writer Ralph Vartabedian contributed to this story.

Jeanne Wright can be contacted at jeanrite@aol.com.