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Used car dealers skirting warranty period

Published:Wednesday | September 9, 2015 | 6:54 PMTameka Gordon

Some used-car dealers are trying to get around the extended warranty terms stipulated under the year-old Revised Motor Vehicle Import Policy by striking side deals with customers who are being asked to accept a shorter coverage period.

Portfolio minister Anthony Hylton was unaware of the practice when Sunday Business approached him last week for comment but said the gambit is unlikely to survive for long as such agreements would become null and void as soon as the motor policy has the weight of the law behind it.

The process to gazette the policy is under way.

Some dealers have "taken a decision" to lower the price on vehicles for customers who sign to their warranty conditions, while those who do not will pay more, said Lynvalle Hamilton, president of the Jamaica Used Car Dealers' Association (JUCDA) and operator of Autochannel Limited.

"You have dealers who will say to the consumer the price for the vehicle is $10 if you get the warranty for three months, but if you get the warranty for one year, the price will be $15," Hamilton said.

The JUCDA president said the association saw nothing wrong with the move, arguing that the dealers "had a right not to give any warranty so long as the consumer examines the vehicle".

"You have dealers who will say the customers reject the warranty in the RMVIP and accept 'X' warranty to accommodate a lower price. Nothing is wrong with that. The consumer has that right," he said.

Before the revised import policy, which was implemented in April 2014, the sellers of second-hand cars typically extended a three-month, or 5, 500-kilometre, warranty to purchasers, regardless of the vehicle's model year.

The RMVIP tossed that practice and stipulates instead conditions for different classes of vehicles, for example, for a Class A vehicle dealers must extend a 12-month or 18,000-kilometre warranty.

The extension of the period is meant as a new layer of protection for car buyers based on the complaints that have arisen regarding problems detected with used cars that customers have to repair out of their own pockets.

Hylton, the minister of industry, investment and commerce, says the new tactic by dealers will be shortlived once the RMVIP becomes law.

"When that is settled, the dealers cannot sign away people's rights. It becomes a legal issue," Hylton said.

The RMVIP was again ventilated at a public forum held in Kingston on Tuesday but has still not been gazetted to effect its legality.

Hylton said the warranty period was among the issues ventilated in the crafting of the RMVIP and that the new terms included in the policy were meant to replace the old way of doing business.

"The discussion was to settle the policy on warranty. It will be null and void once the position on the RMVIP is final," Hylton said, even as he bemoaned the dealers' decision to find a work-around.

The head of the Consumer Affairs Commission, Dolsie Allen, says her agency is aware of the dealers' latest tactic, but could do nothing to stop it until the RMVIP becomes law.

"The challenge we have is that the regulations have not been passed; it is not law," she said, adding that it's unclear what recourse customers who waive the extended warranty period would have were problems to arise with their vehicles.

"A policy is a policy," she said.

JUCDA has been lobbying against aspects of the RMVIP, including the revised warranty period, and insists that there are still areas of the policy over which talks continue.

"Had it been something that is law, even if they (customers) sign such documents, it would not have any effect. But if you are referring to sections of the policy, where you are having discussions on the matter still, then they (dealers) have every right to because it is an agreement between them and the consumer," said Hamilton.

The advantage to the customer who opts for the shorter warranty period, Hamilton rationalised, is that they get the vehicle at a lower price and potentially save on the cost of servicing it.

"If a dealer recognises that they have to take greater risks in giving a lengthy warranty, what they are going to do is double the cost of servicing the vehicle because they will dictate the date and time that the vehicle is serviced."

Allen of the Consumer Affairs Commission warns, however, that car buyers should weigh carefully the short term savings against the potential risk of having to foot the payments for repair charges later.