How do I manage new car delivery damage or delays?
Mitsubishi Pajero Sport 2016
Hi John,
I am in the final throes of purchasing a new Mitsubishi Pajero Sport. I have visited the local regional dealer, as well as spoken to your brokers. So far the brokers are in front, with a last-minute deal that looks attractive.
I am however concerned about two issues I'd be interested in getting your opinion on.
Firstly, the broker agreement form says the dealer can change the delivery date at any time without notice. So although the estimated agreement time is 8-10 days, the agreement could hypothetically still be in force if the dealer decided not to supply the vehicle for six months. So as it currently stands, I could sign the agreement, only to be told that actually, the delivery time is six months, not the 8-10 estimated days. And if I'm unhappy with that, and wish to cancel, I could be liable for a five per cent cancellation fee with the brokers. This doesn't seem reasonable to me. So I'm currently waiting for a response from the brokers on that issue. Whereas I know the local dealer has our specific car in stock.
Secondly, what do I do in the circumstance where the car is delivered and for whatever reason the vehicle is not in an acceptable condition, or doesn't meet the specs? Given that the supplying dealer may be a long distance away, and the local dealer almost certainly (understandably) won't help out with any arguments.
Appreciate your thoughts. Love your site by the way - gave me lots of clues on both the car, as well as potential avenues through the minefield of car purchasing. Thank goodness I don't have to do this often!
Kind regards,
Craig
Hello Craig,
Congratulations on choosing the Pajero Sport - a great all-terrain 4WD at a great price. Read the full Pajero Sport review >>
Pajero Sport is of course designed off the back of the engineering fundamentals of the Triton ute >>
This is a business transaction, and you have to think about it like that. In response toy your specific points:
DELAY
If you read purchasing contracts at dealerships, they also include a similar clause on delay. This is because the supply of the car is outside the control of the dealer. Cars are very specific things: model > variant > colour > trim colour > trans > engine > options, etc. There are a lot of permutations, and no warehouse out the back with 10 of each permutation on a shelf. Generally the dealer must order the one that matches the customer’s exact requirements. When that happens it needs to be shipped here, get customs clearance, be transported to the dealer, get prepared and delivered to you. Sometimes (overwhelmingly not, but sometimes) there are delays. That’s all this clause is about. (There were plenty of delays following the Japanese tsunami, for example.)
I think you are not considering the power of the underlying commercial imperative, which is that nobody gets paid unless you get the car. The dealer doesn’t get paid, and neither does the broker. Therefore all parties to this deal are highly motivated to see you get the car. You are motivated (because you want the car) and the dealer and broker are motivated (because they want to get paid). Sometimes there are delays that are simply beyond anyone’s control. This is rare, but when it occurs it is a huge pain in the neck for everyone.
CANCELLATION FEE
On a $50,000 car that’s $2500. (Most dealership contracts include this 5% clause too. Sometimes 10%.) Here’s my generally off-the-record answer to that: In practise, if you cancel your decision to proceed, a dealer will keep your deposit and might demand the balance of the $2500. If you say words to the effect of ‘bugger off’ then they have to sue you for breach of contract, win, and demand the cash. Trust me on this: Nobody sues anybody for $2500, because it costs more than $2500 to do so. If you paid $1000 deposit, the balance of the liability is $1500, and nobody sues anybody for $1500. Never happens. (Breach of contract isn’t a crime, it’s a civil matter. It’s not worth doing unless for a healthy five-figure sum in damages.)
I talk to people all the time who want to back out of a deal some dealer has essentially coerced them into, and the dealer threatens them that if they do, they will be required to pay the 5%, which they find quite concerning. Of all the people I have told to back out anyway, tell the dealer to shove it, you’re not paying the 5% and buy the car cheaper elsewhere, nobody has ever been sued. (If you go to your solicitor and tell him someone owes you $1500-$2500 and isn’t paying, he’ll offer to write them a letter, but if they then decline or don’t respond, the advice will be to write the debt off, because it’s not worth pursuing. If you give it to a debt collector, they’ll do the same and take 20% if the recipient caves in.)
So I would not be lying awake at night fretting over the 5% liability.
CONDITION
In the case of the car not being supplied as advertised - every car is provided with a unique 17-digit VIN code, which is like its DNA sequence. (It’s on the rego papers, the dealer’s order and (presumably) the purchase contract.) Using the VIN code, the manufacturer can tell you everything about the car: when it was born, precise specifications down to colour, trim and optional features. If you want to make sure the car is precisely what you ordered, ask the broker to send you the precise specs with the VIN code attached. (But basically, it’s the bullet points on the Agreement to Supply.)
In all the transactions I’ve been a party to, there’s never been a car delivered that is not what was ordered. Dealerships don’t do this. They are very careful about it.
If the car is damaged in transit, then this is what insurance is for. (Technically you buy the car at the dealership. That’s when you take ownership of it. And they ship it to you. Because you own it at this point the risk is yours. If it gets damaged getting it off the truck, for example, you ring your insurer and then they decide whether to proceed against the transport company.) Again, this is a remote possibility. It’s hardly as if there’s an epidemic of cars getting damaged in transit. Every car on sale in Australia gets to the dealership by truck. The damage in transit rate is very low. If you don’t like the idea of this risk, you can always pick the car up yourself and drive it home.
Finally, if you get in a dispute about the condition of the car, there’s a huge swathe of consumer law that protects you. (It also protects merchants from consumers who are unreasonable dickheads. There are quite a few of those.) On this point: Overwhelmingly, consumer disputes concerning new cars tend to be around lemons, not surrounding purchase or supply. The car industry is pretty good at selling cars. (And, no, I don’t think the Pajero Sport is a lemon.)
I think the important thing to remember here is that everyone is acting in good faith to supply the car, and that good faith is underpinned by commercial motivation, and these two facts are worth a great deal more than a few clauses in contracts.
I hope this is some relief.
Sincerely,
John Cadogan
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