Damon Ridge still remembers taking a deep breath before buying his $12,000 car, the biggest purchase he had ever made in his life.
Although it was an older four-wheel drive, he hoped it was a reliable car that would get him to his part-time job at a restaurant in regional Victoria.
“I was excited – it was my first car I bought by myself,” the 27-year-old said.
“I was nervous.”
But on the two-hour drive home from the Melbourne dealership, Simple Cars in Ringwood, there were immediate problems.
The indicators did not work and there was a concerning noise during gear changes.
The dealer fixed most of the car’s immediate problems, but Mr Ridge started to wonder if he had made a huge mistake.
New research from the Consumer Policy Research Centre (CPRC) has found many people have experienced similar issues when buying both new and second-hand cars.
It surveyed more than 1000 consumers who had purchased at least one new or used car in the past five years in Victoria, and found more than half said they had bought a vehicle with some sort of fault.
Of those surveyed, 17 per cent said their car had a major safety fault such as the engine suddenly cutting out or the transmission failing.
“Too many faulty cars are sold, dealers aren’t fixing problems they should, and the complaints process doesn’t have consumers’ backs in the way it should either,” said report author and head of CPRC Erin Turner.
Car dramas continued
For Mr Ridge, the problems with his 2000 Mitsubishi Pajero only got worse, and it started to stall and blow thick, blue smoke.
“It was nerve-racking to drive it. I was never sort of comfortable and I’ve never … gotten over that,” Mr Ridge said.
His mechanic told him he believed oil was leaking into the motor’s combustion chamber due to damaged piston rings or seals.
The mechanic suspected a product used to mask engine problems had been added to the engine prior to Mr Ridge’s purchase.
He said repairs would cost more than half its value, which shocked Mr Ridge who had only driven 2000 kilometres in the car.
The car ended up sitting in his driveway, and he found himself forking out money for his car loan, as well as ride-share and taxis to get to and from work.
“Most of the time [the car] was sitting in my driveway, just sitting there gathering dust and rust, and then cobwebs, or it was in the mechanics getting fixed when I could afford to fix it,” he said.
Mr Ridge’s request for free repairs or a full refund from the car dealership were denied.
Desperate, he lodged a dispute with the Victorian Civil and Administrative Tribunal (VCAT), a process he said was complicated and slow.
Eventually, he enlisted the help of the Consumer Action Law Centre, which paid thousands of dollars to have it assessed by an independent expert mechanic, money he never could have afforded.
The expert found “the vehicle was unroadworthy, unsafe and in mechanically poor condition at the time of the sale”, and the total cost of repairing it would, “far exceed the current value”.
He also found the evidence that “strongly suggests” an additive such as Stop Smoke was used prior to its purchase, possibly to mask the engine’s symptoms.
More than 18 months after his purchase in 2021, he reached an agreement with Simple Cars and received a full refund.
Simple Cars declined to be interviewed for this story.
In response to detailed questions about Mr Ridge’s case, the dealership said in a statement: “The matter in question has been resolved amicably through mutual consent… We appreciate the open and constructive dialogue that allowed us to reach a satisfactory resolution. As a result, we have no further comments to add. We would like to express our gratitude to Damon for his patience, understanding and cooperation throughout this process. It is our firm belief that resolving issues in a mutually beneficial manner fosters positive relationships and paves the way for [the] future.”
The CPRC said many other consumers were not so lucky.
It is calling for national consumer law to impose penalties on dealers who fail to provide a remedy like a repair for consumer guarantee failures and an overhaul of how people can get help.
“The worst that can happen to them (dealers) is that a tribunal or a regulator can turn around and say, do what you were meant to do, originally, repair that car,” Ms Turner said.
The Australian Competition and Consumer Commission (ACCC) has been calling for penalties to be imposed on companies that do not fix or replace faulty goods, including motor vehicles, for a number of years.
The ACCC continues to advocate for law reform in this area.
In a statement, the ACCC said it was also aware consumers were having trouble finding remedies through state-based tribunals and small claims courts and was looking into the area along with ASIC and state-based consumer affairs bodies.
Automotive body denies issue in the industry
The car industry peak body in Victoria has disputed that the selling of faulty cars was widespread.
“A lot of those complaints, in our view, are minor issues with vehicles,” said CEO of the Victorian Automotive Chamber of Commerce Geoff Gwilym.
“When we talk to our dealers, they tell us that many, many customers go back to them complaining of major faults in vehicles, and generally they’re not major faults.
“They could be minor wiring that could be fused based, or they could be simple things like trying to pair a phone.”
He was against introducing large fines for dealers who did the wrong thing, stating the Victorian government already had the power to cancel a trader’s licence and the industry would support increased enforcement to stamp out rogue behaviour.
He said the majority of the state’s 2200 motor dealers wanted repeat business, so there was an incentive to treat customers well.
“Sometimes there are rogue players that come into the industry,” he said.
“If the government has evidence they are a rogue trader, get rid of them.”
So, what can you do if you buy a lemon?
Erin Turner said while the legal situation after purchasing a car was complex, there should be rights under consumer law if a vehicle broke down quickly, and in Victoria a statutory warranty could apply.
“You should be able to take that car back and depending on the fault, either get it repaired or if it’s really serious, a refund or replacement,” Ms Turner said.
She said it was not always an easy process, however, with dealerships ‘pushing back’ and the complaints process being complex for consumers.
The group found that a used car complaint could take up to 60 steps for the consumer from discovering a fault to getting what they were owed.
Ms Turner is calling for the introduction of an industry-funded ombudsman, featuring access to free independent mechanics, to better assist consumers.
But the industry opposes the idea, and says motor dealers would simply pass the cost on to consumers, increasing the price of vehicles.
Instead, Mr Gwilym argued VCAT should have its funding boosted by the state government to improve the way it worked.
He also called on Consumer Affairs Victoria and VCAT to release more information publicly about the specific nature of consumer disputes with motor dealers to better inform the debate.
Consumer Affairs Victoria (CAV) received 3050 inquiries and complaints about used cars last financial year, up from 2804 in 2021-2022.
A review of motor car trader licences last financial year resulted in 78 licences being revoked, partly because some had ceased operating.
“Consumer Affairs Victoria takes breaches of motor car trading laws very seriously and will investigate and take action where necessary,” a government spokesperson said in a statement.
Four infringement notices to car dealers were issued in 2022-23.
Ms Turner said consumers should hold firm.
“Try to resolve it with the dealer first, go in armed with knowledge about your rights, but expect push-back … be prepared for it and be prepared to go to the tribunal knowing how difficult that will be,” she said.
Have you had a poor experience with the purchase of a used car? Was there a satisfactory ending? Share your thoughts in the comments section below.
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