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Buyers being shortchanged on warranty

Once the manufacturer is notified a vehicle is "sold", the warranty starts ticking over.

Motorists buying new cars or "showroom demonstrators" could be unwittingly missing out on some of their warranty.

Dealers are prematurely advising manufacturers and importers that cars are sold to pocket sales incentives such as cash and overseas trips, according to an industry source. Once the manufacturer is notified a vehicle is "sold", the warranty starts ticking over. 

However, it could still sit on the dealer's yard for several months before it is actually sold to a customer who is then shortchanged on their warranty. The industry source predicts that as many as one in five new cars could have reduced warranties.

AMIF senior policy director Colin Duckworth said some car makers deem the warranty period to have started when they are notified of a vehicle’s sale, even though it can sitting in the caryard. “This practice has been around for who knows how long,” Mr Duckworth said.

In Germany this year some 500,000 this year n the first half of this year have been “sold” by dealers to themselves in this way, but Mr Duckworth said the practice was not as prevalent here.

“We're aware of it and it's on the agenda of next board meeting for about the fourth time,” he said. “It's a very sensitive area. Some dealers are incentivised to have vehicles put on as demos or whatever. This is the thing that our board of directors have to grapple with it ‑ what can be done about it? It's probably not illegal.”

He said the law was not “exactly clear” on when the warranty period starts. Fair Trading offices in three states said they each had a “handful of complaints” each year about warranties running out before the owners expected, but had differing opinions on warranty periods.

NSW Fair Trading spokesman Peter Palazzi advised buyers to ask the dealer when the manufacturer's warranty will commence. “In the conduct of dispute resolution, NSW Fair Trading views the commencement of warranty as the date that the consumer entered into the contract with the motor dealer, not the date of delivery, date of registration or when the dealer advises the manufacturer/importer that the vehicle has been cleared," he said.

Queensland Office of Fair Trading spokeswoman Liz Costello said warranties against defects, or manufacturer's warranties, “generally commence around the time a product or service is supplied”.

“While new car warranties are issued by the manufacturer, consumers may ask their motor dealer any questions they have about the warranty start date at the time of purchase, and cross check the warranty document to ensure it is accurate.”

Auto clubs have reported that some motorists have been told the warranty starts as early as the date the buyer orders a vehicle. Consumers who have concerns about the application of a manufacturer's warranty have been advised to contact the office of Fair Trading in the state where the vehicle was bought.

WARRANTY TIPS FOR NEW CAR BUYERS/OWNERS

  • Ask the dealer when the warranty period begins
  • Find out how much time is left on the new car warranty and check the document
  • If you own a car that has been bought in the past couple of years, check your warranty status now and get any problems fixed immediately while you are still covered by warranty
  • If you have any quibbles with the dealer or manufacturer about honouring your warranty, go to the Ofiice of Fair Trading in the state where you bought the vehicle
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