The car retail market and consumer guarantees

Car manufacturers are facing mounting pressure to comply with their obligations under the Australian Consumer Law (ACL), particularly in relation to directing customers to warranties in place of consumer guarantees. Often consumers are unaware that under the ACL they have automatic rights to refunds and repairs, regardless of what the warranty covers.

The Australian Competition and Consumer Commission (ACCC) has become increasingly concerned that car manufacturer’s policies fail to adequately account for consumer entitlements under the ACL.

In December 2017, the ACCC published its report, New Car Retailing Industry: A market study, indicating that an alarming amount (20%) of complaints and enquiries made to the ACCC involved consumer guarantees and motor vehicles. The report made a number of recommendations and highlighted the following problem areas for the industry relevant to consumer protection, including the following:

  • car manufacturers are advised to update complaint systems and better handle consumer guarantee claims and warranties in line with the ACL;
  • accurate information about fuel consumption was found to be a major issue for consumers, with the ACCC suggesting a ‘realistic’ testing standard be introduced by the Federal Government; and
  • a mandatory scheme has been suggested to ensure manufacturers share technical information about their cars with independent repairers who were found to have limited access to such details.

Importantly, the report also found that many car dealers have been responding to consumer guarantee claims within the framework of the policies set by manufacturers, which sometimes do not adequately incorporate the ACL. As a result, the report calls upon manufactures to amend their complaint systems to ensure compliance with the ACL and to include no limitation on consumers’ rights.