51/09    7 May 2009

The OFT has today launched a short market study into the sale of second-hand cars.

The study follows concerns about the large number of consumer complaints relating about the sector. Last year, more than 68,000 consumers complained to Consumer Direct about issues with second-hand car sales. Concerns around defective vehicles, services and potentially misleading selling are consistently among the top complaints to the government-funded advice service.

The second-hand car market is large, with sales of approximately £35 billion in 2008, and the level of harm appears substantial: the financial cost of car clocking alone is estimated to be £100 million per annum.

The purpose of the study is to understand the causes of such high levels of consumer complaints and to consider whether existing consumer protection legislation is sufficient and effective in this sector. 

The study will focus on sales by dealers rather than private sales between individuals, but the findings will aim to provide clarity across the wider second-hand car market. The OFT hopes to work closely with the second-hand car industry, local authority Trading Standards Services, consumer bodies and other interested parties.

John Fingleton, OFT Chief Executive, said:

'Buying a second-hand car is a major and potentially difficult purchase, given the fact that many consumers lack the necessary experience or knowledge to make an informed buying decision. We aim, particularly given the current financial climate, to look at the entire process for consumers when buying a second-hand car and whether existing regulation delivers sufficient robustness, confidence and clarity for both the customer and car dealer.'

The OFT expects to complete the work by the end of the year. The OFT will be contacting key parties directly, other interested parties can submit written views by 5 June to second-handcars@oft.gsi.gov.uk.

NOTES

1. Mintel estimates the value of second-hand cars sold in 2008 was around £35 billion.

2. HPI, the independent information source for the motor industry, estimates that the financial cost of car clocking - turning back the mileage reading on a vehicle, is around £100million per year.

3. Consumer Direct is a telephone and online consumer advice service funded by government and managed by the Office of Fair Trading. It operates in partnership with local authority Trading Standards Services to offer consumers clear, practical and impartial advice and information.

4. The OFT will work closely with local authority Trading Standards Services which have extensive experience in tackling issues related to second-hand car complaints. The OFT will contact trade bodies, dealerships, consumer groups and other organisations associated with the sector. The OFT also aims to contact consumers who have complained about the sector as well as government departments.

5. OFT market studies are carried out under section 5 of the Enterprise Act 2002 (EA02) which allows a market-wide consideration of both competition and consumer issues.

6. The second-hand car sector has featured consistently as a main consumer complaint on Consumer Direct for the past three years. The OFT has previously taken action to address concerns in the second-hand car market. In October 1997 the OFT published Selling Second-Hand Cars, which made a number of recommendations. See Selling Second-Hand Cars. In relation to franchised dealers in 2004, the OFT secured agreement from motor manufacturers that warranties on newly-bought cars would not be invalidated by maintenance work done outside of the franchise network as long as it was conducted according to the motor manufacturer's standards. See press release 85/04.

7. In May 2008 the Consumer Protection from Unfair Trading Regulations (CPRs) came into effect. The CPRs require traders including second-hand car dealers to show professional diligence when dealing with consumers.

8. The OFT is unable to provide advice or resolve individual complaints for consumers. Consumers who are concerned they have been unfairly treated by a company can contact Consumer Direct (tel: 08454 04 05 06, or visit the Consumer Direct website).