WA Faulty Car - Dealer Won't Refund My Money - What are My Options?

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17 November 2015
Hi, I bought a car (2006 Subaru Impreza WRX) from a car dealer in Perth at 10 September 2015. The salesman said the car is fully serviced and everything is working well, there is no problem with this car. I believed him and bought it for $17, 990

For my peace of mind, I brought the car to service on 16 September 2015 (as it was the fist available time they had), just to make sure everything is OK. It came out that there were many things that needed changing: engine oil, diff oil, gear oil, transmission oil, power steering fluid, slump fluid washer, transfer case bearings, spark plugs, brake pads, and rotors, and put new air flow meter.
That all cost me $1995.55.

Then one car technician said there is something wrong with the Subaru engine. They did a compression test to engine and it came out there is one cylinder dead and it would cost more than $6000 to fix this one. As I bought the car from a dealer, I had a 3-month warranty for the engine and gearbox. I brought the car to them, it took about 3 weeks to return the car as they didn't have any time for me.

Once the car was there, it took also 2 weeks to get an answer. They said yes there is something wrong with cylinder, and we did a compromise that dealer would buy my car back. He offered me $16 000 ($1990 less than I bought) and I agreed.

Then few weeks later I still don't have money on my bank account. Yesterday, I went to the dealer and he started to blame me, saying that it was my fault and offered me $14 000.

Of course, I refused as we had an agreement that he would pay me 16k. In the end, he agreed and said he would pay me 16k and I would get the money on Friday (20 november, about 2 months later when I brought my Subaru back to dealer)

My question is: does the dealer have a right to pay me $1990 less than I bought it? Or does he need to give me back $17 990 that I bought the car originally?

What do I need to do? What are my options under Australian Consumer Law?


Hi Lallu,

The ACCC has put out a booklet dealing specifically with the Australian Consumer Laws with regard to purchase and servicing of vehicles.

The ACL provides that manufacturers and retailers must guarantee certain things about their vehicles including that they must be of acceptable quality and reasonably fit for purpose.

Whether or not a vehicle is of acceptable quality is determined by whether a reasonable consumer, fully aware of a motor vehicle's condition (including any defects) would find it:
  • fit for all the purposes for which vehicles of that kind are commonly supplied
  • acceptable in appearance and finish
  • free from defects
  • safe
  • durable
Other things that are taken into account are:
  • the nature of the motor vehicle – for example: is it new? 4wd? high performance etc?
  • the price paid; and
  • representations made about the vehicle, including advertising and warranties
If the vehicle is not of acceptable quality - the remedy you are entitled to as a consumer will depend on whether or not it is classified as a major or minor failure: The brochure defines major failures to include instances when "a reasonable consumer would not have bought the motor vehicle if they had known about the full extent of the problem. For example, no reasonable consumer would buy a new car with so many recurring faults that the car has spent more time off the road than on it because several mechanics have been unable to solve the problem."

When there is a major failure to comply with a guarantee, you can choose to either reject the vehicle and choose a refund or identical replacement or keep the vehicle and ask for compensation for the drop in value caused by the mechanical problem.

However since you have already agreed to sell the car back to the dealer for less I don't know whether this would preclude you from obtaining your full entitlement under the consumer law. I would talk to the office of fair trading or WA equivalent about it. They may be able to assist you.