Regulation of Trade Practices in the Sale of Motor Vehicles (Part 2)

B. The Motor Vehicle Dealers Franchising Act

1. Prohibited Practices

The Motor Vehicle Dealers Franchising Act regulates the transactions of motor vehicle dealers and manufacturers. Section 57-16-4 prohibits a number of dealer practices, including:

a.  Requiring a purchaser of a new motor vehicle to also purchase special equipment or accessories for the car as a condition of the sale and delivery, if such equipment is not already installed on the vehicle;

b.  Using false, deceptive, or misleading advertising;

c.  Willfully defrauding any buyer;

d.  Failing to perform obligations placed on the dealer in connection with the preparation of a new vehicle as provided in the manufacturer’s preparation and delivery agreements;

e.  Failing to perform the vehicle manufacturer’s warranty agreements; or

f.  Representing or selling as new any motor vehicle which is used, is a demonstrator model or which is otherwise a used motor vehicle;

g.  Intentionally failing to perform any written agreement.

2. Consumer Remedies Under the Motor Vehicle Dealers Franchising Act

A consumer may bring suit against a seller, manufacturer or distributor for failure to act in accordance with the requirements of the Motor Vehicle Dealers Franchising Act. If the consumer prevails, he or she may be awarded a monetary sum to cover their actual damages from the breach of warranty, as well as costs for bringing the suit and attorney’s fees. If it is determined the seller acted maliciously, then the consumer may be awarded punitive damages up to three times the amount of actual damages. §57-16-13.

C. Motor Vehicle Quality Assurance Act

The Motor Vehicle Quality Assurance Act, §§57-16A-1 through -9, is New Mexico’s “Lemon Law.” This Act applies only to the sale of motor vehicles to “consumers,” who are defined as purchasers of vehicles for personal, family, or household use. This Act does not apply to vehicles purchased for business use.

1.  Seller Obligations When Selling a New Vehicle

a.  Duty to Repair New Vehicles:  A manufacturer (its agent or authorized dealer) must make all repairs that are necessary to bring a new vehicle into conformity with its express warranties if the consumer reports the nonconformity to the manufacturer (its agent or its authorized dealer) within the period of the warranty—or within one year of originally receiving the motor vehicle—whichever is earlier.  §57-16A-3(A).

b.  Duty to Replace or Accept Return of the Vehicle:  If, after a reasonable number of attempts to repair the vehicle, the manufacturer (its agent or authorized dealer) is unable to conform the vehicle to the express warranty, and the defect or condition substantially impairs the use and market value of the vehicle, the manufacturer (its agent or authorized dealer) shall replace the vehicle or accept return of the vehicle from the consumer.  §57-16A-3(B).

(i) If the consumer returns the vehicle, the dealer shall refund the full purchase price, including all collateral charges, less a reasonable amount for the consumer’s use of the vehicle.

c.  No Duty to Replace or Accept Return:  A manufacturer (its agent or authorized dealer) is not liable for replacing the vehicle or accepting return of the vehicle and refunding the consumer’s money if:

(i) The alleged defect does not substantially impair the market value and use of the vehicle;

(ii) The alleged defect is the result of the abuse, neglect, or unauthorized modifications or alterations of the vehicle;

(iii) The consumer’s claim was not made in good faith; or

(iv) The manufacturer (its agent or authorized dealer) has any other affirmative defense allowed by law.  §57-16A-4.