Motor vehicle warranties 

The Motor Dealers Act 1974 requires licensed dealers to fix certain defects if they occur in vehicles that they have sold. This is called a statutory warranty. When buying a second-hand car you can only get a statutory warranty if you buy the car from a licensed motor dealer.

New vehicles 

The Motor Dealers Act provides for a statutory warranty of 12 months or 20,000 km (whichever comes first). However, most manufacturers provide a manufacturers warranty from the date of sale.

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Second-hand vehicles including demonstrator vehicles 

The Motor Dealers Act provides a statutory warranty of 3 months or 5,000 km from the date of sale (whichever occurs first) on second-hand vehicles, which includes demonstrator vehicles, that have travelled less than 160,000 km and are less than 10 years old (from the date the vehicle was built).

Motor dealer forms

Licensed dealerships are required to put a form on every second-hand vehicle for sale or on display describing the vehicle. The form includes the dealer’s name, cash price, engine number, odometer (speedo) reading and whether a warranty applies. The form will be either a Form 4, 6 or 8 and it is important to know the difference, as it affects the warranty.

Form 4 means the car has a statutory warranty as described above.

While the dealer does not have to provide a Safety Inspection Report (a ‘pink slip’), the vehicle is still required to be roadworthy and its condition should be reasonable for its age and mileage.

Form 6 means the car has a statutory warranty, but not for defects listed by the motor dealer as being excluded from the warranty. The dealer must list the defects that are excluded and give an estimate of the cost of repairing them. Roadworthiness items (such as tyres or brakes) cannot be excluded from the warranty. A car displaying a Form 6 must be sold with a pink slip showing that it is roadworthy.

Form 8 means the car is not covered by warranty. Generally this is because it is older than 10 years (from the date the vehicle was built), has travelled more than 160,000km, is a commercial vehicle or priced above the luxury car limit. A car displaying a Form 8 must be sold with a pink slip showing that it is roadworthy.

Some types of vehicles are excluded from this warranty as listed under the heading Non-warrantable vehicles.

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Vehicles excluded from second-hand warranty 

Commercial

Commercial vehicles are excluded from the statutory warranty. Basically, a commercial vehicle is a motor vehicle constructed or adapted principally:

• to carry goods
• to carry 10 or more adults
• for industrial or agricultural use.

‘Dual-cab’ or ‘crew-cab’ vehicles are commercial vehicles.

Note: The following are not commercial vehicles, and (subject to age, distance and price) will be covered by warranty.

• a utility, station wagon or panel van:
  • that is the same make as the factory-produced motor car
  • in which the part of the body form, forward of the windscreen and the greater part of the mechanical equipment are the same, or substantially the same, as in the motor car (Holden Commodore or Ford Falcon station wagon or utility)
• a motor vehicle that is adapted for camping use (for example, a campervan)
• a four-wheel drive with at least one forward-facing rear passenger seat. That is, most of the normal long wheel base four-wheel drive passenger vehicles (apart from dual and crew cabs which have been excluded).

The fact that a vehicle may be used for 'commercial' purposes (courier, taxi, etc.) after purchase does not void the statutory warranty.

Luxury vehicles

A luxury motor vehicle is a vehicle where the cash price exceeds a prescribed amount.  The prescribed amount is the motor vehicle depreciation limit under the Income Tax Assessment Act and is set in the annual Federal Budget.

For the purpose of the Motor Dealers Act the figure for the 2010 - 11 financial year was set at $75,375 for fuel-efficient vehicles and $57,466 for other vehicles. Vehicles sold above this price are not covered by a Statutory Warranty or the Motor Dealers Compensation Fund.

Other vehicles not covered by statutory warranty are:

• a trailer (which includes a caravan)
• a motor vehicle or a second-hand motorcycle that cannot be registered on New South Wales roads
• a substantially demolished or substantially dismantled motor vehicle
• a four wheel drive vehicle that has no forward facing rear passenger seat.

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Non-warrantable vehicles 

Second-hand vehicles that do not have a statutory warranty must be roadworthy at the time of sale. The dealer is obliged to give consumers a form 8 which states there is no warranty under the Motor Dealers Act and must also provide a Safety Inspection Report, more commonly known as a pink slip, issued in accordance with the Road Transport (Vehicle Registration) Act 1997 stating that the vehicle is roadworthy. The Safety Inspection Report must not be issued more than 90 days prior to the vehicle being sold. The only exception is when the registration of the vehicle has been renewed within one month of the date of sale.

The Australian Consumer Law requires that goods sold are of acceptable quality and purchasers of non-warrantable vehicles are protected by implied conditions that apply to all consumer contracts.  These are:

• goods must be of acceptable quality
• goods must be fit for the purpose supplied
• goods must be as described or match the sample.

Where consumers feel that a vehicle was not roadworthy at the time of sale, they should obtain an independent mechanical report to support this claim.

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Motorcycles 

The Motor Dealers Act provides for a statutory warranty of 10,000 km or 6 months after sale, whichever occurs first.

This applies to new motorcycles that can be registered in NSW and have travelled less than 7,000 km before being sold by the dealer.

The warranty period is reduced however by 1 month for each 2,000 km that the motorcycle has travelled before being sold by the dealer.

New motorcycles that can be registered in NSW but have been driven 7,000 km or more when sold, have a statutory warranty of 3,000 km or 3 months (whichever occurs first).

New motorcycles that cannot be registered in New South Wales, that comply with Australian Design Rules but due to their design cannot be registered ie. a motocross bike, are covered by a statutory warranty of 5,000 km or 3 months after sale (whichever occurs first) irrespective of distance travelled at time of sale.

Second-hand motorcycles (that can be registered in New South Wales, that have travelled less than 30,000 km, and are less than 5 years old at the time of sale) are covered by a statutory warranty of 3,000 km or 3 months after sale (whichever occurs first).

Types of motorcycles not covered by statutory warranty:

• second-hand motor cycles that are more than 5 years old or have travelled more than 30,000kms at time of sale
• second-hand motor cycles that do not comply with relevant Australian Design Rules (ADR's)
• second-hand motor cycles that cannot be registered in New South Wales (due to their design)
• a substantially demolished or substantially dismantled motorcycle (this does not mean slight damage).

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Extended warranty 

Some dealers offer an extended warranty for periods beyond the statutory warranty. 

For more information go to the Motor vehicle extended warranties page on the Fair Trading website.

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Items excluded from warranty 

A statutory warranty does not apply where there is a defect:

• in a tyre or standard 12 volt motor vehicle battery
• in a chain or sprocket on a motor cycle. (This means the drive chain and sprocket only – chain driven internal components of the motor, for example, time or cam chain, are considered warrantable items)
• relating to any accidental damage to a vehicle which occurred after the sale of the vehicle, and when it was not in the possession of the dealer
• arising after the sale of a vehicle from:
  • misuse or negligence by a driver
  • the use of the vehicle for motor racing or motor rallying. (Note: The warranty is only void if the defect is caused by racing or motor rallying)
• in an accessory which was not fitted to, or supplied with the vehicle at the time of sale.

Tune-ups

In general, a dealer is not responsible for routine adjustments such as:

• tune-ups
• wheel alignments
• oil changes
• wheel balances
• automatic transmission service.

These are generally considered to be ongoing maintenance items and are not covered by warranty.

However, they cannot be entirely excluded from the warranty provisions of the Act because in certain circumstances, the service may have to be done as part of a warranty repair, and the dealer will then be responsible for it.

For example:

• after engine repairs, a tune-up may be required to ensure correct operation
• after a ball joint repair, a wheel alignment may be required. 

Oil consumption

Generally when determining excessive oil consumption the age of the vehicle, distance travelled and the engine size is taken into account.

Brakes

The following are covered by warranty:

• disc pads less than 3 millimetres in thickness
• brake shoe linings less than 1.5 millimetre in thickness.

Other guidelines are:

• the inside diameter of brake drums is not to be greater than the manufacturer's specifications
• disc rotor thickness should be no less than manufacturer's specifications.

Accessories

Purchasers may reasonably expect all accessories fitted at the time of sale to be in good working order. These include:

• air conditioning
• clocks
• sound systems
• alarms
• rear demisters.

In any dispute, the vehicle’s age and distance travelled are taken into consideration.

Superficial damage on a second-hand vehicle

Superficial damage to the paintwork or upholstery, which would have been apparent on a reasonable inspection of the vehicle at the time of sale, is not covered by warranty on a second-hand vehicle. This includes:

• dents or scratches to the paint work
• missing cosmetic fittings (badges, bump strips, pin-striping, etc.)
• torn upholstery or linings.

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Towing 

If a vehicle cannot be driven because it is not roadworthy or has a defect covered by consumer guarantees and the vehicle has to be towed to the dealer or a repairer, the dealer may be obliged to pay the cost of transportation.

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Dealers' obligations 

A motor dealer is obliged to repair or make good any defect existing in the vehicle at the time of sale or occurring within the warranty period so as to place the vehicle in a reasonable condition having regard to its age. Repairs must be undertaken with due care and skill and within a reasonable time, having regard to the availability of parts or specialist services. Where suitable, and provided safety is not compromised, second hand parts may be used in repairs.

At all times it should be remembered that a dealer’s obligation is defined in Section 27 of the Act, but in general terms the motor vehicle and all accessories fitted at the time of sale are included in the warranty.

Note: The dealer is obligated to repair a vehicle with parts consistent with the age and mileage of the vehicle. If the customer requires new parts then he may negotiate to pay the difference in the value of the parts.

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Dealer disclosure of damage 

New vehicles

A motor dealer is obliged to disclose damage in a new vehicle when:

• there has been replacement or repair of the whole part of any panel, structual member or component of the vehicle by cutting and welding, by application of heat or by any other means
• there has been replacement of not less than 4 major external panels fitted to the vehicle by means of bolts, screws or other mechanical fastening devices
• it is water damaged.

Hail damage

Dealers are required to declare if a new vehicle has been damaged by hail irrespective of whether the vehicle has been repaired or not. The disclosure must be made via a Form 13 that the dealer and the purchaser sign before or at the time of sale.

Used vehicles

Consumers are urged to arrange an inspection of the vehicle prior to purchase. However, a dealer should not mislead a consumer regarding any previous accident damage to the vehicle, eg. by stating that there has been no damage to the vehicle if they are aware that the vehicle has had major panel work done to it.

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Further information 

NSW Fair Trading

Enquiries: Mon to Fri 8:30am to 5:00pm
Tel: 13 32 20

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