Watchdog warns on car guarantees

By KATHERINE HOBY, consumer affairs reporter

Ten used car dealerships in Auckland and Hamilton have been given warnings by the Commerce Commission after making misleading odometer guarantee claims.

Director of Fair Trading Deborah Battell said the dealers had been luring people into their yards with claims such as "mileage guaranteed" or "speedo guaranteed".

"People are advertising guaranteed mileage but getting buyers to sign sales agreements which say 'hey, we're not going to guarantee it'. It's a total contradiction," she said.

"This is basically enticing people into yards under false pretences."

The standard Motor Vehicle Dealers Institute sales agreement and some window cards on cars specified there was no warranty in respect of distance travelled for overseas cars. This was a direct contradiction of guarantees advertised by the dealers in this case.

Ms Battell said dealers needed to be aware of their responsibilities under the Fair Trading Act.

"The sales agreement forms ... clearly contradicted the advertisements guaranteeing mileage," she said. "The commission regards this practice as misleading and will take action if it continues."

Under the Motor Vehicle Sales Act, recently passed in Parliament, the commission will have a role in enforcing the proposed consumer information standard for the sale of used cars under the Fair Trading Act.

Window cards will be replaced by a notice with compulsory specific information about a car, including the distance travelled.

MVDI executive director Steve Downes said he believed the dealers had made honest mistakes.