Dealers sour on lemon law

Thursday, Nov. 13, 1997 | 11:16 a.m.

RENO -- Some auto dealers feel a state lemon law intended to protect those who buy used cars may end up backfiring on consumers.

This law, said Don Hellwinkle of the COD Garage in Minden, will reduce the price paid for trade-in vehicles and inflate the purchase price of the used car. "The little guy is going to be hit," he said.

His comments came after a workshop by the state Department of Motor Vehicle and Public Safety Wednesday on proposed regulations to put the new law into effect. More than 70 people attended the session and some testified the regulations were "cost prohibitive and time prohibitive."

The law, passed in the closing days of the 1997 Legislature, requires cars with more than 75,000 miles to be inspected and the defects disclosed to the prospective purchaser. If the DMV finds a dealer has violated this law, then the dealer will have to offer warranties -- ranging up to 30 days -- for all their vehicles with more than 75,000 miles.

Russ Benzler, chief investigator for the Bureau of Enforcement in the department, said the law was "designed to address the horror stories" told to the Legislature, such as car engines blowing up within blocks of leaving the lot.

"The intent (of the law and regulations) is not to represent a vehicle as a cherry when it's a dog," he said.

A similar workshop is scheduled for Las Vegas next Tuesday at 10 a.m. at Cashman Field. The department will consider the complaints or suggestions about its regulations and draft up final rules with two additional hearings in January before they go into effect.

The proposed regulation details the kind of inspection that must be made and requires the dealer to identify what is wrong with the vehicle. Dante Frascq of Jones West Ford, said one section of the regulation would require the engine to be torn down, a job that would take five to six hours.

That section says the crankshaft, lifters or push rods must be identified as the reason for any knocks or misses. And Frascq complained a required compression test would require another one to two hours.

He suggested the customer be told there is a knock in the engine but not require the dealer to identify the cause. "This would be cost prohibitive and time prohibitive," he said of the proposed requirement.

James Bayus, used car manager for Champion Chevrolet, said the proposed regulations were "unreasonable." To check for some leaks, as required by the proposal, would mean steam cleaning the motor and doing dye tests. And to determine if there were cracks in the block could mean "dismantling the engine," he said.

"If you factor in all the costs, this will kill the value of the car and the value of the market," Bayus said. He said if a car passes the smog tests required in Clark and Washoe counties, it should be exempt from the compression test.

But Benzler said this regulation applies statewide and there are no required emission testing in the 15 other counties.

Dolly Volini of the Nevada Franchised Auto Dealers Association urged the state agency to soften its inspection requirements. She suggested it only require "a reasonable inspection," which would include a visual inspection of the vehicle, a test drive and safety and soundness checks.

She said the department should take an "incremental step" rather "than taking a giant leap to fix a problem that involves only a small niche of the industry."

The experts in this field, Volini said are the dealers, not the DMV. She urged caution "before we start putting ma and pa dealerships" out of business.

Others suggested this law gives more power to the consumer if the dispute ever reaches court, and that it will end up with lawyers getting rich from these complaints. And they said this law may conflict with the Uniform Commercial Code and federal law in the sale of cars.

The proposed regulations say that if a dealer is forced to offer a warranty, then the consumer should not be assessed any charge if a defect had to be corrected.

But Volini said that is not in the law. Some car dealers, she said have a deductible on car warranties and the consumer should pick up all or part of it when the repairs are being made. Benzler agreed to look at this section to see if the department included something in the regulation that was not in the law.

A car dealer tagged with three substantiated complaints in a year of not complying with the inspection and disclosure requirements would have to offer warranties on vehicles.

For instance, a car with between 75,000 and 80,001 miles would carry a 30-day or 1,000-mile warranty. A car with the odometer showing more than 100,001 miles would have a warranty of two days or 100 miles.

"Some consumers will never be satisfied, even if the car was free," complained R. J. Colovich, president of the independent Auto Dealers of Northern Nevada.

"If the Legislature wants us to hold the customer's hand and tell him about the car, fine," Colovich said. "But we should not have to get into the specifics."

If there is a knock in the engine, than the customer should be told, he said. "If there's an oil drip, let him know." The consumer, Colovich said, "can take it from there," with the option of going to his own mechanic to look at the vehicle.

The dealers talked about returning to the 1999 Legislature to change or abolish the law.