Car dealers raise concerns that lemon law may increase business costs

SINGAPORE: The Singapore Vehicle Traders Association (SVTA) has raised concerns that the lemon law will increase the business costs of its members, especially for used car dealers who are worried that buyers may make frivolous claims for defects.

SVTA counts about 390 car dealers dealing in both brand new and used cars as its members.

Although the lemon law kicked in on September 1, not many car dealers are aware of how it works.

President of SVTA Neo Tiam Ting said: "Car dealers are not very clear what should they do if the consumer comes to them and says that something is spoilt and that they want to claim it under lemon law.

"They are not very clear whether we need to pay them, or compensate them, or repair it."

The dealers said that some consumers may be driven to do so when COE prices plummet unexpectedly, and buyers feel they overpaid for their cars.

As a safeguard, car dealers have been encouraged to send the used cars for evaluation checks to avoid fraudulent claims by consumers.

However, doing this will drive up their costs, especially as there are now more items on the check list.

According to SVTA, such checks now cost between S$168 and S$200, an increase of between S$25 and S$32 per car.

Mr Neo added: "In our evaluation report, we now have added more things to check. So when we hand over the car to the consumer, we go through more thorough visual and mechanism checks."

Mr Neo said that customers may ask for a refund or even for the car to be replaced and asked: "Who is the independent (body) to judge what’s a fair amount if there’s really a complaint of a lemon car?"

"The worst case is when it comes to replacements. We can’t find a car which is the same year, same month, same COE, same mileage, same condition," he added.

But the Consumers Association of Singapore (CASE) says the lemon law is important for those who bought second—hand vehicles as they may not be covered by a warranty.

CASE president Lim Biow Chuan said: "Does it mean despite paying a hefty sum for the second—hand car and the car breaks down the next day, there’s nothing he can do about it?

"I think that cannot be because the consumer does have rights and the lemon law provisions are meant to assist the consumer to go back to the retailer to say ’look, even though this is a second—hand car, I expect that certain parts of this car would be in a workable condition’."

The Ministry of Trade and Industry and CASE has held some 40 seminars and roadshows to brief consumers and retailers about the new lemon law. An additional 15 sessions are expected to be rolled out in the next two months.

CASE said that it encourages car dealers who may have questions about the lemon law to attend these sessions.

— CNA/wm