Motor vehicle traders have been required to provide certain information to prospective buyers of used motor vehicles for some time. Under the previous regime, the Motor Vehicle Dealers Act 1975, this information was provided on the window card. These requirements were amended and carried over to the new regime. The window card was renamed the Supplier Information Notice (SIN).

Why Information Should Be Provided

Buying a motor vehicle is a major financial commitment for consumers. For many, it represents their second largest single purchase (the largest being the purchase of a house) and it will often also involve some sort of credit arrangement.

In addition to the significant financial investment, people rely heavily on access to or the use of a motor vehicle in all aspects of their lives: getting to work, shopping, transporting others and engaging in social and community activities. Consumers risk significant cost and inconvenience if things go wrong.

Motor vehicles are also technically complex and many things can affect their value. Some of these are not obvious to a prospective buyer from a visual inspection at the time of purchase, but become apparent through use or the passage of time.

Buyers therefore need reliable information to help them assess the value of a vehicle and negotiate an appropriate price.

Compulsory information disclosure makes it easier for buyers to get the information they need to make an informed decision about the vehicle they are considering buying. That information needs to meet a minimum standard. It must be accurate and easily understood. It must be enforceable.

The responsibility to provide this information is placed on suppliers because generally they are better informed about the motor vehicle and can obtain detailed information about it more easily.

The Ministry's recent review of the MVSA shows a continuing need to regulate for the provision of certain information. The focus of this discussion paper therefore is not on whether information disclosure should be compulsory, but rather on what information should be provided and, more particularly, how it should be provided.

What Information Should Be Provided

The type of information buyers need when buying a motor vehicle falls into three broad categories:

Supplier information
Information about the supplier, such as their registration status and contact details, helps buyers to seek redress if things go wrong with the deal. Registration status also indicates what additional protections may be available.
Specific vehicle information
This information acts as a reliable indicator of a vehicle's value and includes:
- price and likely additional costs (such as registration, road user charges)
- age and vehicle history (year of manufacture, date of first registration, distance travelled, whether a used import)
- make and model
- design features
- vehicle specifications (for example engine capacity/configuration, safety features).
Individually, these indicators may not allow the buyer to make a reliable assessment of a vehicle's value. When displayed together, however, a judgement as to value can be made.
Consumer advice relating to motor vehicles
The MVSA and Consumer Information Standards (Used Motor Vehicles) Regulations require certain information to be provided to consumers via the SIN and establish additional protections for consumers when they buy from motor vehicle traders. These protections are not available, except as may be provided under common law, in the case of private sales.

It is important that consumers know of and understand these various rights and obligations. Non-compliance may affect the value of a particular vehicle (or impose additional unforeseen costs in order to reach compliance) while a failure to disclose may result in consumers being denied access to redress that is lawfully available.

In the Ministry's review, there appeared to be general acceptance that the provision of sale and vehicle details and information about consumer rights was important to consumers.

There were concerns, however, that the way this information had to be provided:
- caused confusion
- unnecessarily increased compliance costs, and
- constrained suppliers from providing other information that consumers valued.
There was also a suggestion that the general consumer information, while valued, was likened to the "fine print" of a contract and largely ignored.

These points are explored in Chapters 4 and 5.

How Information Should Be Provided

Under the previous regime, the window card was used both as the information tool for prescribed information and as a marketing device. In its newer form as the SIN, greater emphasis has been placed on providing information that is considered a reliable indicator of value and can be independently verified.

The prescriptive manner in which information must be provided on the SIN was the central cause of concern relating to information disclosure in the submissions received by the Ministry in its review. No consensus emerged, however, on how the information should be provided.

This discussion paper provides an opportunity to help develop the SIN so it best meets the differing needs of all those who participate in the used motor vehicle market.

Some guiding principles are that the content and format needs to be:

easy to understand
limited to key information
suitable for the medium through which it is provided
consistent across the market so consumers become more familiar with it and it is easy to enforce
provided at minimum compliance costs.

These issues are explored in more detail in the discussion in Chapters 4 and 5.

Who Should Provide the Information

Section 14(1) of the MVSA establishes that all motor vehicle traders have a responsibility to make sure a SIN is provided with each used motor vehicle they offer for sale, or which they display (or facilitate the display) for sale. A motor vehicle trader is defined in section 7 as any person who carries on the business of motor vehicle trading and includes a car market operator, an importer, wholesaler, and car auctioneer or car consultant. Section 8 states that a person shall be treated as carrying on the business of motor vehicle trading if they hold themselves out to be carrying on this business, or sell more than six vehicles within a 12-month period, or import more than three vehicles within a 12-month period (unless they can prove that such sales or imports were not for the primary purpose of financial gain).

When consumers sell vehicles through a car market operation, the operator must take reasonable steps to make sure the person selling the vehicle provides a SIN. A car market operator under the MVSA means a person who:

carries on the business of providing any premises or place for a market for the sale by other persons of used motor vehicles, or
who operates any facility (for example, an internet web page) for the primary purpose of facilitating the sale of used motor vehicles (which sale is completed through, or by means of, that facility).

The MVSA extended the obligation to provide a SIN to consumers selling used motor vehicles through car market operations (essentially display for sale operations, car fairs and the internet auction) because in these venues private sales and trade sales take place side by side.

Different rights are attached to private sales and sales by traders, so it is in the consumer's interest to have the distinction indicated clearly. The SIN provides a tool for making this distinction and makes sure the consumer choosing a vehicle in a venue that offers a mix of private and trade sales has access to the same kind of information on all the vehicles on display.

An individual selling through these venues is availing themselves of the benefit of a market-type venue. Requiring them to provide basic information about their motor vehicle, and those who carry on the business of facilitating such sales to make sure this information is provided, is not considered onerous.

This discussion paper does not explore the question of who should provide the SIN. There is some discussion that needs to be held about the "reasonable steps" requirement and the requirements placed on transactions between traders under the MVSA. These will be explored in the Ministry's consultation later this year on MVSA amendments.

The different sellers required to provide information and their ability to do so has been an important consideration, however, in considering the matters addressed in this paper.

Previous Page / Table of Contents / Next Page

Review of the Operation of the Motor Vehicle Sales Act 2003

Disclaimer

Privacy and Copyright Statement

This site uses cookies to track and analyse usage.