Warranties demanded for used-car sales
Mel Cooke, Gleaner Writer
In the ongoing tussle between new- and used-car dealers for the limited purchasing dollar, a major difference between them is the length of warranty offered on the vehicles they sell. For while the new cars come with extensive warranties on the engine and other parts, with an extended period often available as long as the purchaser satisfies the required conditions, the same does not apply to used cars.
Many used-car dealers offer a three-month warranty on the engine and transmission; beyond that period, the purchaser is on their own. And there are those purchasers who have found that approximately 90 days is far from sufficient time for a vehicle's defects to present themselves.
It is against this background that this year there was a call for used-car dealers to offer better warranties on the vehicles they sell - and, as a whole, there was resistance by the dealers to the proposal. It is an issue that continues into 2015, as it is yet to be resolved.
The situation has deteriorated to the point where, earlier this month, The Gleaner reported that the Trade Board (which regulates the importation of motor vehicles) and the Jamaica Used Car Dealers Association (JUCDA) were heading towards an outright conflict, after moths of dialogue about the matter. While the Government is insisting on a six-month warranty, the used-car dealers are maintaining their stance of far less.
Ian Lyn-Muhammad, a former JUCDA head, said, "The JUCDA and the Trade Board are working towards a solution. But suffice it to say that a six-month warranty on a used car is unheard of in the world and must not be allowed to become policy."
Impact on consumers
He made it clear that it is the purchaser who will feel the impact. "If dealers are going to be responsible for what happens to cars they sell for up to six months, buyers are going to have to pay more. It is as simple as that," Lyn-Muhammad said.
From the Government's perspective, Trade Board chairman Benthan Hussey said, "I don't know that anyone can say the Government is killing the used-car industry because the evidence is not there. But we are looking at the existing policy which affects both new- and used-car dealers."
At the heart of the matter are policy paper amendments tabled by the Ministry of Industry, Investment and Commerce, becoming effective in April. The section which has led to the disagreement says:
"All certified used motor vehicle dealers and brokers must provide warranties in accordance with the following guidelines, determined by the vehicle's age and odometer reading. Class B Warranty: Six months or 7,500 km/4,660 miles, whichever is attained first.
"Class B Warranty is applicable to vehicles manufactured more than four years, but fewer than seven years before the sale date, with an odometer reading of less than 106,000km/65,867miles.
"Class C Warranty: Three months or 4,500 km/2,796 miles, whichever is attained first. Class C Warranty is applicable to commercial vehicles manufactured more than six years but fewer than 11 years before the sale date with an odometer reading less than 178,000 km/110,607 miles.
"The warranty covers the parts mentioned in the following schedule: engine; transmission; differential; steering gear; drive chain; front end; major electronic components (computers, air-conditioning system, general electrical system); and suspension system."
The Trade Board is holding firm to its position, as it has done consistently. In September, chief executive officer of the Trade Board, Victor Cummings, said that the used-car dealers were earning enough to provide the warranties. Not only are the dealers making huge profits, Cummings said, but there have been cases where, only days after making a used-car purchase, consumers are left with vehicles which show serious defects.
Later in September, though, JUCDA head, Lynvalle Hamilton, attributed high used-car prices to the duties and general consumption tax they attract. He zeroed in on the warranty issue.
"This will mean higher costs for the consumer. There is no way we can be in business and are being asked to factor additional expense, and that expense is not factored in the price of the car," he argued.
"We have been asked to give warranty on front-end parts and electric parts, and auto parts dealers don't give warranties on these; we think it's unreasonable," Hamilton said.
He said the system may be open to abuse. "We know that if you give a year warranty on a vehicle that is being driven at a place in Jamaica where the roads are very bad, every month the customer is going to want us to change front-end parts. Any sensible dealer would have to sell the car at a certain price so they can survive," he said.