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OFT publishes research, and consults on guidance to the industry, as part of second-hand cars market study

143/09    18 December 2009

The OFT has today published four research reports undertaken as part of its market study into the sale of second-hand cars. These comprise a survey of second-hand car buyers, second-hand car dealers, UK local authority Trading Standards Services and the results of a mystery shopping exercise.

The main survey of second-hand car buyers purchasing from dealers and auctions found that:

• Almost a fifth (19 per cent) of those buying a second-hand car had experienced problems with it after the sale.
• Most problems arose within three months of purchase (86 per cent). 
• Less than half of those who made contact with the dealer about the problem said it was completely rectified (47 per cent). 
• Nearly thirty per cent said the problem had not been rectified at all by the dealer. Consumers buying from independent dealers were more likely to believe that the problem had not been rectified at all compared to consumers buying from franchised dealers. 
• Among those who paid to resolve the problem the average cost was £465. The average cost was significantly higher if the car had been bought at auction (£752).

The mystery shop survey of used car dealers found that over one quarter (27 per cent) of shoppers felt the information they received about the target vehicle and services available at the dealership was 'insufficient' or 'extremely insufficient'.

Also as part of the second hand car market study, the OFT is today consulting on draft guidance that sets out the legal obligations of second hand car dealers under two key pieces of consumer law: the Consumer Protection from Unfair Trading Regulations 2008 and the Sale of Goods Act 1979.

The OFT launched its market study in May 2009 following concerns about the large number of consumer complaints relating to second hand car sales. Last year, the OFT-managed advice service Consumer Direct received 68,000 complaints about issues with second hand car sales. The purpose of the market study is to understand the causes of such a high level of consumer complaints and to consider whether existing consumer protection legislation is sufficient and effective.

Heather Clayton, OFT Senior Director of Infrastructure, said:

'The second hand car market has consistently attracted a high number of consumer complaints. Our research throws light on the specific problems that consumers experience so remedies and, where appropriate, consumer enforcement, can be targeted. Our guidance on relevant legal obligations, out for consultation today, will assist both the industry and our Trading Standards enforcement partners.'

The OFT intends to publish the full market study report in early 2010. All four research reports and the consultation on guidance are available from the consultation page.

NOTES

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

2. 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.

3. 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.

4. The second-hand car sector has featured consistently among the top consumer complaints to 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.

5. In May 2008 the Consumer Protection from Unfair Trading Regulations (CPRs) came into force. The CPRs apply to commercial practices before, during and after a contract is made. The CPRs contain a general prohibition of unfair commercial practices and, in particular, contain prohibitions of misleading and aggressive commercial practices.

6. 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).

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