There is no “lemon law” for commercial vehicles, but there is a remedy using the Magnusson Moss Warranty Improvement Act of 1974, which addresses everything with a warranty, from cars to toasters. And commercial vehicles fit in that grouping.
This is an area of passion and career work for me. I have been involved with over 10,000 cases in which I’ve rendered a written opinion report on a vehicle that may comply with state lemon laws or the manufacturer may be in breach of warranty.
The language mostly used, and the phrase I’ve adopted as an industry standard is where a vehicle usually meets the state lemon law or is in breach of warranty if there is a “substantial impairment of use, safety or value”.
Lemon Law Versus Breach of Warranty
Let me address the difference in a lemon law case and one involving breach of warranty. Most states have a lemon law that describes a vehicle that has had multiple breakdowns and repairs, or repair attempts within the first parts of a vehicle’s service life. 18 months and 18,000 miles in New Jersey, for example. Most states seem to gravitate around the first year or two and the first 12,000-24,000 miles. For vehicles past this initial phase, or that were purchased used, the Magnusson-Moss Warranty Improvement Act may apply. This act, like I said, covers everything from cars to toasters and deals with the same “substantial impairment of use, safety or value”, but without the state mandates that could make a manufacturer repurchase your vehicle. With that said, it isn’t common that the car manufacturers will automatically comply with repurchasing your vehicle just because it appears that the repair history is in line with state lemon law standards. Many times, the manufacturer will have to be sued, and this is because of several factors: Americans are spoiled and impatient. It’s true. They want it NOW, like at a fast food restaurant, and the manufacturers know that people get fed up with waiting, they’re frustrated with their vehicle, and they’ll trade it or sell it. Most of the time, when you get rid of your car, you lose the ability to file suit over it, and the vehicle manufacturers know that. Another factor is that while you may feel entitled to a new vehicle and may technically qualify, the manufacturer will offer you a lease/loan payment or two for your troubles or offer some sort of trade-in assistance that may or may not work for you.
Service History Can Affect Value
The area I have helped in since 2001 is the technical and valuation opinions that assist the attorneys who help consumers in these cases. I write formal reports after doing research on a consumer’s file and give a solid opinion as to the degree of negative impact that the service history has on a vehicle’s value.
I am questioned very often about looking at a vehicle during these cases, just as your car would be visually appraised during trade-in at a dealership. While the condition of the tires, windshield, and paint are important to me, I can fix or repair problems in these areas, and usually in an inexpensive manner. What I cannot correct, though, is a bad service history. I can’t make it go away. It must be disclosed, and when disclosed, will cost the owner money. A bad service history is just like having a “salvage” or “rebuilt” title – it significantly impacts the vehicle’s value and place in the market. Many analogies can be made to compare this – a salvage-title vehicle, or one with a bad service history showing multiple breakdowns and many days out of service, is like being presented with the proposition of buying a pair of blue jeans where a pocket had been ripped off. The pocket was sewn back on, but was the sewing job as good as the sewing style at the factory? Will it stay repaired? Can you see the repair? With 40 other pairs of jeans just like them on the rack, why should I purchase the repaired pair? If I do purchase the repaired pair, I would expect a large discount. Back to the question, though, why should I purchase the repaired pair?
Important to the consumer, also, is the valuation process used when assigning a value to a vehicle with a derogatory service history. Several factors have to be considered, but the primary notion to realize is that value guides are just guides, and the true value of a vehicle is what someone will pay for it, and the art portion of the process comes into play. Value guides don’t buy vehicles. Website value assessments don’t buy vehicles. Mechanics don’t appraise cars, except in some situations where a quote to repair a component is factored into vehicle value. Values come from appraisers who bear the responsibility for these decisions and pay their dues through the experience of good and bad decisions.
When I calculate a value in these lemon law and breach of warranty cases, I start the procedure just like evaluating a vehicle for trade-in at the dealership. I look at the title status, thoroughly examine the service history, the frequency of repairs, the significance of the repairs and repaired areas as related to safety, performance and braking systems, and the time out of service. I look at the parts that were replaced and their significance to the operation of the vehicle.
After gathering the pertinent information like model, option packages, mileage and whether the vehicle has been modified, abused or neglected, I determine a base value using popular value guides. One such value guide has four levels of value, and my experience allows me to place the vehicle roughly into one of those categories, depending on the severity of the impact of the service history.
Once this number is determined, I evaluate whether other additional factors play a role in final value. For example, on a vehicle like a Kia, Hyundai or Jaguar with a reputation for poor long-term quality, having a significantly negative service history could impact the value by another 10-20%. The same is true in an opposite factor, with a Honda or Toyota product, both with reputations for perfection – one of these vehicles with a bad history would be “hit” harder than other vehicles. Additional value deductions are also taken into consideration on rare, expensive, or unusual vehicles with bad histories.
Ultimately, these factors listed certainly don’t limit me or other valuation experts when opining in formal reports or in trials, mediations, and arbitrations, but allow them to be explained to the layperson or vehicle owner interested in how the process works.
In the instance of lemon law or breach of warranty cases, I am asked by plaintiff’s attorneys to look back to the day and time of the vehicle purchase to address true damages, and what the consumer SHOULD have paid for the vehicle, given the following history. The final value that I obtained above, given the base value, the assignment of a value category, and any additional value deductions produces a percentage of deduction from the based used value. That percentage is transferred to the original purchase price, and the deducted difference is my opinion of the difference of what the plaintiff paid, versus what they received in return.
When I refer to “used value”, I feel the need to explain that my valuation opinion is that value given in trade against a retail price on a new or used vehicle. It is not a wholesale figure, as that would muddy the waters, so to speak, and it is my intention to be as clear as possible on this. For example, it is not the trade value a dealer would give you against an “internet special” price, but the new vehicle’s original MSRP instead.
WARRANTIES AND LEMON LAW SCENARIOS
A couple of final thoughts on warranties and the lemon law – a vehicle owner has a couple of responsibilities in their role for compliance with their manufacturer’s warranty. First, you must report any and all problems to the dealership as soon as possible. It is unfair to wait a significant period of time, and then become upset that the problem wasn’t repaired sooner. Secondly, you must make the vehicle available for repair in a reasonable manner. If you withhold the vehicle, you compromise the dealer’s ability to repair it, and risk having the warranty voided.
There are other things that can void the warranty, and these are also items I inquire about when investigating a case. If your vehicle is modified, abused, or neglected, the warranty can be voided, and these actions make the vehicle ineligible for lemon law recovery. To clarify, “modifications” aren’t putting in custom floor mats or a decal on the windshield. These are changes made that impact the performance and reliability of a vehicle. Abuse could be taking a mild 4×4 into a radical off-road excursion. Neglect is failure to maintain the vehicle. Simple concepts, but avoiding these things are your responsibility as a vehicle owner.
Before my friends chime in and chide me for replacing the turbocharger, fuel injectors, computer, wheels, tires, the entire suspension and other things on a certain black import wagon I owned a few years back, let me say that with these modifications and the resulting abuse, I expected ZERO warranty coverage, and that was a decision I made and fully accepted the consequences.
To learn about how faulty repairs may warrant a downtime claims, see this article.