You might think that the 'lemon law' covers all used cars bought from dealers. Think again. Increasingly, consumers are finding out that dealers are selling cars on consignment, and Singapore's lemon law does not cover these cars. This law protects buyers of defective consumer goods at the time of delivery.
Under lemon law, dealers must rectify any faults reported within six months of delivery
But most car buyers The Straits Times spoke to said they would still seek some form of warranty from consigned car sales.
Product Manager Angus Tang, 30, said, "I would still insist that the seller provide a three to six-month warranty for the car. I won't pay for a big item like a car without warranty."
At a time when the motorcar industry continues to receive many complaints from consumers, the option to sell cars on consignment has become more appealing to dealers. More dealers are now opting to sell cars on behalf of owners instead of buying used cars and reselling them for a profit.
Mr. Fed Wu, who runs Allmotoring, said that out of the 30 cars he has in his showroom, 20 are on consignment. In the past, consignment cars made up only 20% of his stock. The cars on consignment are mostly premium ones such as Porsche, Audi and BMW.
Consigning your car is allowing a dealer to sell the car on your behalf, but retaining legal ownership of the car until it is sold
"With today's low COE prices, customers want to sell their cars at the highest possible price, as most of them would have paid much more for their COEs back then. At the same time, new cars have also become cheaper," said Mr. Wu.
President of Singapore Vehicle Traders Association Michael Lim noticed how consignment sales are picking up this year, but for now, it is mostly for premium cars. "If COE prices for cars continue to remain low, we could see more consignment sales for smaller cars in future,'' he said. Dealers usually take a cut of 1% of the sale price for a consignment sale. They may make a lower profit but there is zero risk, said Mr. Lim, who is also the Chief Executive Officer of Motorway Group.
For the sixth time last year, the motorcar industry had the highest number of complaints, said the Consumers Association of Singapore (CASE). Last year, CASE received 2,335 complaints, and from January to September this year, there were 1,365 complaints, of which 45% were on car defects.
CASE Executive Director Loy York Jiun said the association has also been getting a handful of complaints involving the sale of consignment cars over the years. "Such complaints are generally about consumers being unaware that the second-hand car they purchased was sold on consignment, thus they were not able to seek recourse under the lemon law after discovering that the car was defective," said Mr. Loy.
Lawyer Chia Boon Teck said the buyer should, at the outset, ask the seller whether the sale is on a consignment basis.
