CAR dealers have expressed concerns over Putrajaya’s consideration to impose “lemon law” to protect second-hand vehicle buyers. 

They said the proposed law can be detrimental to them while at the same time allows second-hand buyers to take unfair advantage by demanding remedy even for small defects in second-hand vehicles.

The dealers said the present Hire Purchase Act 1967 was sufficient to protect both buyers and sellers. 

Lemon law refers to law that protects purchasers of cars and other consumer goods against products that fail to meet standards of quality and performance.

Negri Sembilan Car Dealers and Credit Companies Association chairman Teh Seng Hap told The Malaysia Insight that although many advanced countries have implemented lemon laws, car dealers there were finding it hard to come to terms with the law. 

“As far as I know, it is still difficult for car dealers in Singapore to accept it because consumers are likely to use the lemon law to ask for remedy even for small problems,” he told The Malaysian Insight. 

“I understand that the government wants to keep up with advanced countries, but the problem is that our system is not on track,” Teh added. 

Last month, Domestic Trade and Consumer Affairs Minister Alexander Nanta Linggi said the ministry was looking into efforts to improve laws related to the sale and purchase of used vehicles with the implementation of lemon law. 

He said this was important as it would protect consumers from becoming victims of fraud or having to bear losses when buying used vehicles.

Teh also said if the government was adamant on introducing lemon law, it should then be done in stages. 

He said the ministry should have a briefing session for car dealers to understand lemon law and discuss how to promote it together.

“The lemon law is mainly to protect consumers, but business people are also consumers. For example, used car dealers also buy vehicles first and then sell them, so how should the lemon law be defined? This must be clarified.

“Frankly, I don’t think the lemon law is good for car dealers, but from the government’s standpoint, I think the lemon law will increase consumers’ confidence in used car dealers and increase their business.”

“But they don’t seem to think that car dealers are in a loss when buyers return the car. This is also a big problem,” Teh added. 

Teh emphasised that if Malaysia wants to implement the lemon law, it must list all the details, including the circumstances under which the car can be returned, money deducted or compensation, so as to protect the interests of both parties.

Get feedback from all stakeholders

Kuala Lumpur and Selangor Car Dealers and Credit Companies Association vice president Lee Puay Loong said this was not the first time the government has mentioned the implementation of the lemon law.

He said that there was no need for a lemon law given that there is a hire-purchase law to protect consumers. 

“I think that our country already has a hire-purchase law, which is enough to protect consumers. Basically, there is no need for a lemon law. Redundant laws will only bring car dealers into contradictions and business difficulties.

“Hire-purchase laws have always been widely used in the industry. Once a consumer complains to the Domestic Trade and Consumer Affairs Ministry, officials will come to us to understand the situation,” Lee said. 

He continued that, in general, if a customer has a problem after purchasing a car, a responsible car dealer would take the initiative to properly handle the problem.

Therefore, he worries that once the lemon law is implemented, customers will threaten car dealers using the law, making it difficult for them to do business.

“The lemon law protects consumers who buy new and second-hand cars, but usually new cars have fewer problems, and second-hand cars have more complaints.

“However, the problems of complaints are inseparable from car buyers.

“For example on fuel consumption, after buying a car some consumers will listen to the opinion of people, then will say it is not their ideal car and will claim they are facing problems with fuel consumption.

“What car dealers are worried about is that the implementation of the lemon law will make small problems bigger, and consumers will take the opportunity to find trouble with car dealers,” he said. 

He, however, said the association would not oppose the government’s implementation of the lemon law, but hoped Putrajaya would listen to public opinion first before any implementation.

Federation of Motor and Credit Companies Associations of Malaysia (FMCCAM) president Tony Khor Chong Boon said the lemon law has been implemented in the United States for more than 30 years.

“The lemon law has been implemented in the US, Singapore, China and other countries, which can more comprehensively protect consumers, not only the sale of cars, but also the sale of electrical appliances.

“Although there is a consumer protection law in Malaysia, lemon law can further protect consumers’ rights and interests and improve consumers’ confidence in used car transactions,” he said. 

“So, it is better to try to work out the details and regulations before they are implemented, so that car dealers can also be protected. We have also had several meetings with the Domestic Trade and Consumer Affairs Ministry on this matter.”

Nanta said that from January to August this year, the Tribunal for Consumer Claims recorded a total of 1,126 cases related to the sale and purchase of used vehicles.

“The Domestic Trade and Consumer Affairs Ministry has had discussions (on lemon law), and we are also gathering feedback from the industry,” he was reported as saying. – September 14, 2022.