What is a Manufacturer Buyback?

woman buying a car

If you’re looking to purchase a new car, you may be considering a “manufacturer buyback.” While there can be a substantial difference in cost between a buyback and a new car, it’s important to know what you might be getting into before you make the purchase. Although a manufacturer buyback can save you a significant amount of money upfront, they can sometimes be more trouble than they’re worth — especially if the vehicle was labeled a lemon.

What is a Buyback?

A buyback is a vehicle that the manufacturer repurchased from its previous owner. Generally, there are two types of manufacturer buybacks —Lemon Law buybacks and goodwill buybacks.

If a car had an issue that made it rise to the level of a lemon, the manufacturer may be required to repurchase it as a “Lemon Law Buyback” under the Tanner Consumer Protection Act provision of the Song-Beverly Consumer Warranty Act — California’s Lemon Law. When a manufacturer “buys back” a vehicle because it had a problem, they typically make repairs and put the car back on the market to resell to another consumer. However, this doesn’t always mean that the defect has been fully repaired.

A manufacturer might also buy back a vehicle as a goodwill gesture to maintain a loyal customer base. Sometimes, there is nothing wrong with these vehicles — they may even have been reacquired by the manufacturer as part of a loyalty program. However, it’s essential to be aware that sometimes manufacturers may try to conceal a “Lemon Law Buyback” by referring to it as “goodwill buyback.” This practice is prohibited. Consumers who purchased a lemon, relying on the misrepresentations of a manufacturer or auto dealer may be able to assert certain legal claims to recover their damages.

When Will a Manufacturer Buy Back a Lemon Vehicle?

California’s Lemon Law entitles consumers to a manufacturer buyback if they’ve purchased a new or used vehicle that doesn’t conform to its warranty. In other words, a “lemon.” A vehicle might be a lemon if it has a defect that substantially impairs its value or makes it unsafe to drive.

Before a consumer can invoke the lemon law, a reasonable number of repair attempts must be made to remedy the defect. Generally, four trips to the authorized dealer for repairs is considered sufficient to establish that the car is a lemon — two, if the fault renders the car unsafe to drive. If the problem still can’t be repaired, or the car has been in the shop for thirty days or more, the manufacturer may be required to “buy back” the vehicle and provide the consumer with a refund or replacement.

Importantly, to be eligible for a manufacturer buyback under the lemon law, the vehicle must be under the original warranty at the time the nonconformity is discovered. There’s also a presumption that a vehicle is a lemon — warranting a buyback or replacement — if the problem arises within the first 18 months from delivery or 18,000 miles driven.

Is a Manufacturer Buyback or Lemon Reported?

California has strict laws that require car dealerships and manufacturers to fully inform a consumer about a vehicle’s lemon history. Both the manufacturer and dealership must make certain disclosures concerning a car’s defects and the repairs made to fix them.

Under the California Automotive Consumer Notification Act, a manufacturer buyback must have a decal visibly affixed, indicating the car’s lemon status. The sticker is required to be placed on the left door frame of the car, or on the main point of entry for other vehicles such as motor homes. Additionally, the manufacturer must register the vehicle in its name and request that the DMV indicate the car is a “Lemon Law Buyback” in both the title and registration certificate.

An auto dealership has specific obligations, as well. If you inquire whether a vehicle was a manufacturer buyback, an auto dealer must truthfully disclose its status. By law, the dealership is required to provide you with a written disclosure, to be signed, informing you that a car has a lemon history. The disclosure statement must indicate the type of defect reported and the repairs made to correct the nonconformity.

Should I Purchase a Manufacturer Buyback?

Just because a vehicle is a manufacturer buyback doesn’t necessarily mean it’s not fit to drive — but it’s crucial to do your diligence. Depending on whether the defect that made the car a lemon has been fully repaired, a buyback can offer significant value and suit your specific needs and budget. If you’re considering purchasing a buyback, you should do thorough research on the particular vehicle you’re considering — before spending your money.

In deciding whether a manufacturer buyback is a good option for you, make sure to review the vehicle’s lemon history to determine what the defect was and what repairs were made to fix it. In some cases, a vehicle labeled as a lemon may be safe and reliable. For instance, if the car was in the shop for thirty days — and the nonconformity was fully corrected on the thirty-first day — it must still be labeled a lemon by law.

If the defect was minor, or the problem was resolved by replacing a faulty part, a buyback can be a cost-effective option. However, if the nonconformity involved the steering or brake system, transmission, engine, or another component that could cause potential safety issues, it might be best to avoid purchasing that particular vehicle. If a defect can continually cause issues, you may end up going back to the dealership for a never-ending series of repairs. It’s always best to test drive a vehicle before purchasing it to determine whether there are any obvious problems.

Contact a Southern California Lemon Law Attorney

If you bought a vehicle that fails to conform to its warranty, you may be entitled to certain remedies under the lemon law. Additionally, there are specific laws that protect consumers who unknowingly purchased a vehicle with a lemon history that wasn’t disclosed by the dealership. A skilled California Lemon Law attorney can help ensure your rights are protected and advise you of your legal remedies. However, it’s important to understand that you only have four years from the date you discovered the car’s defect to file a case under the lemon law in California.

The Ledbetter Law Firm helps people in Southern California who have experienced lemon law issues with their vehicles obtain a vehicle replacement or the refund that they deserve. With offices conveniently located in San Diego and Torrance, California, telephone and video conferencing options are also available. Call (619) 374-0252 to schedule a consultation with a California Lemon Law attorney today.