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.

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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The Motor Dealers Act defines a 'demonstrator motor vehicle' as a motor vehicle:

• that has not been sold to a person other than a dealer or wholesaler
• that has not been registered to a non-trade purchaser
• that has not been used for any purpose other than
  • a purpose in connection with its manufacturer or sale (eg. factory testing or delivery) or
  • the purpose of demonstrating the motor vehicle to a future buyer.

Demonstrator vehicles have the same statutory warranty as used vehicles, namely 3 months or 5,000 kilometres (whichever occurs first).

Number plates and registration label should be affixed to the vehicle and the vehicle clearly marked as 'demonstrator'.

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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, that have travelled less than 160,000 km and are less than 10 years old.

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’) for a vehicle to which a statutory warranty applies, 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, has travelled more than 160,000km, is a commercial vehicle or priced above the luxury car limit (ie. $57,180). 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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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 definition of commercial vehicle does not apply to the Suzuki Hatch and Mighty Boy because their cargo space is not considered to be constructed or adapted principally to carry goods.

These and similar vehicles are considered to be covered by warranty if the criteria of distance travelled, age and price (luxury vehicle) applies.  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 effective as at 1st July 2008 was set at $57,180. 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 motor cycle 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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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 (a ‘pink slip’) issued in accordance with the Traffic Act 1909 stating that the vehicle is roadworthy.  This report must not be issued more than 90 days before the date of sale unless the vehicle's registration was renewed within one month of the date of sale or in the case where the dealer supplies the Safety Inspection Report the period may be up to 90 days.

The Sale of Goods Act requires that goods sold are of a merchantable quality and purchasers of non-warrantable vehicles are protected by implied conditions that apply to all consumer contracts.  These are:

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

This applies to motor cycles that are capable of being registered in NSW and that have travelled less than 7,000 km.

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

Motor cycles, which are not second-hand and which can be registered in NSW but have been driven less than 7,000 km when sold, have a statutory warranty of 3,000 km or 3 months (whichever occurs first).

Motor cycles that are not second-hand and are not capable of being registered in New South Wales 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 (capable of being 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 motor cycles 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 its design)
• a substantially demolished or substantially dismantled motor cycle, (this does not mean slight damage).

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The manufacturer's warranty cannot be enforced under the Motor Dealers Act, but can be through other consumer legislation.

The Act defines a dealer's warranty obligations. However, in general terms the motor vehicle and all accessories fitted at the time of sale are included in the warranty.

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Some dealers offer an extended warranty for periods beyond your statutory warranty. Check carefully, as many of these warranties are only valid if you observe very strict servicing and spare parts agreements and generally only cover specific items.

Before deciding to buy an extended warranty you should make sure you understand fully what is being covered. There are often a significant number of exclusions and conditions in extended warranties.

For more information go to the Motor vehicle extended warranties page.

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A statutory warranty does not apply in the following cases. Where there is a defect in:

• a tyre or battery
• 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)
• a defect 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
• a defect 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:  This does not mean that the total warranty is void if the vehicle is used for such purposes – it is only void if the defect is caused by racing or motor rallying)
• a defect 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.  Such repairs are a dealer’s obligation.

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 are 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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If a vehicle cannot be driven because of a defect covered by warranty 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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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.

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.

The dealer is obliged to repair, or make good the defect so as to place the vehicle in a reasonable condition having regard to its age. Where suitable, and provided safety is not compromised, second hand parts may be used in repairs. In any dispute the vehicles age and distance travelled are taken into consideration.

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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New and demonstrator vehicles

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

• 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 has occured
• replacement of not less than 4 major external panels fitted to the vehicle by means of bolts, screws or other mechanical fastening devices has occured or
• 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

Motor dealers must declare whether, according to REVS data, a vehicle has previously been written off.

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. For example, state that there has been no damage to the vehicle if he is aware that the vehicle has had major panel work done to it.

For a REVS check visit www.revs.nsw.gov.au

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