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Lemon squeeze: dodgy new car sales in regulator's sights

CHOICE welcomes moves by the ACCC to investigate consumer problems with new cars

17 June 2016

Consumer group CHOICE has welcomed the ACCC's announcement of a 12-month market study into new car retailing, focusing on competition and consumer issues, including misleading and deceptive practices.
 
"Consumers have been struggling with dodgy lemon cars and poor repairs for too long, and we are glad to see the ACCC use its powers to shed some sunlight on these issues," says CHOICE Policy and Campaigns Adviser, Sarah Agar.
 
"Buying a new car is one of the biggest investments Australians make, and unfortunately our research shows the market is rife with shonky behaviour.
 
"For example, a staggering two-thirds of all new car buyers have experienced problems with their new car.[1]
 
"We particularly welcome the focus on misleading and deceptive conduct at the point of sale, including when it comes to claims about performance and fuel efficiency.
 
"Fuel costs are consistently reported as one of the biggest cost-of-living concerns for Australian households.[3]
 
"There is a substantial gap between the fuel efficiency claims car manufacturers make and the performance of vehicles in the real world, and this gap is growing.
 
"It is ridiculous that Australian consumers are being given information on vehicle fuel efficiency that bears no resemblance to how the vehicles consume fuel in the real world, and we hope this market study will show the full extent of this practice," Ms Agar says.
 
In its recent submission to the review of the Australian Consumer Law, CHOICE called for a taskforce to be set up to investigate and report on compliance with the consumer guarantees regime across the motor vehicle industry.
 
CHOICE has also raised concerns about fuel efficiency claims in April 2016 in response to a Federal Government inquiry into vehicle emissions.[4] In 2015, UK consumer group Which? tested 200 cars fuel efficiency claims, with about a quarter of the cars tested also available in the Australian market. Of those, non-electric cars had their kilometres-per-litre specifications oversold by 14.3% on average.[5] 
 
"There are serious problems that are harming consumers in the new car market, and we are glad to see the ACCC is preparing a solid evidence base to inform further action," says Ms Agar.
 
"When a sector like the new car sector is not working well, market studies help identify the problems and work towards effective solutions. The ACCC should be able to use market studies like this one as a powerful tool to help consumers."
 
CHOICE urges the ACCC to focus on the following issues as priorities for its investigation:
  • Car dealers who mislead consumers about their rights to repair, replacement or refunds, using heavy-handed confidentiality agreements;
  • Car fuel efficiency and performance claims that bear no resemblance to real-world performance; and
  • Unfairly locking up engine computer data that limits consumers' choice of repairer.
[1] See CHOICE, 15 March 2016, 'Turning Lemons into Lemonade: Consumer Experiences in the New Car Market', available at https://www.choice.com.au/transport/cars/general/articles/lemon-cars-and-consumer-law#report
[2] Ibid. Base: n=985 car owners who had a problem with their new car. Q: Have you signed/been asked to sign a confidential agreement that prevents you from disclosing details about the refund or replacement offered when resolving the problem with your new car?
[3] CHOICE, (2015), Consumer Pulse: Australians' attitudes to cost of living 2014-15  
[4] CHOICE, April 2016, Submission in response to the Government's Vehicle Emissions Discussion Paper, available at https://infrastructure.gov.au/roads/environment/forum/submissions.aspx
[5] CHOICE, D. Graham, 13 November 2015, 'Fuel for thought', available at https://www.choice.com.au/transport/cars/general/articles/fuel-consumption-testing#whichfindings

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