A California state agency has accused Chrysler Corp. of reselling "lemons" to unsuspecting buyers without telling them it had repurchased the cars from previous owners because of defects.
The Department of Motor Vehicles said the allegations involve 118 Dodges, Jeeps, Chryslers and Plymouths sold to consumers through dealerships in Northern California. The model years are 1989 to 1992.
A Chrysler spokeswoman on Wednesday denied the allegations, saying the auto maker is in full compliance with California law and disputes with the DMV's findings.
"We feel we have evidence that we have made full disclosure and we have a meeting set up with the DMV to go over the material," spokeswoman Rita McKay said. She declined to give further details.
If found guilty, Chrysler faces possible revocation or suspension of its license to sell cars in California, though a fine is considered more likely. General Motors Corp. paid $330,000 in April to settle similar charges, while denying any intent to defraud or mislead consumers.
The DMV said its investigation shows that Chrysler delivered most of the repurchased vehicles to a Northern California auction house, which then allegedly resold them to auto dealers. The dealers then allegedly sold the cars to consumers. The dealers and the auction house have not been charged.
A new car is considered a lemon in California if its defects are not fixed within four attempts or after 30 days in the shop during the first year of ownership. Car owners can sue manufacturers to force them to repurchase a car.
The Center for Auto Safety, a Washington-based advocacy group, estimates that about 50,000 lemons are repurchased nationally each year. While it isn't known how many of them are then resold, consumer groups have called for closer monitoring of what becomes of the vehicles.
Motor Voters, a Sacramento consumer organization, argues that cars with serious mechanical defects should be sold for scrap only.
The nature of the defects involved in the Chrysler case couldn't be learned Wednesday. Consumer advocates said that in general, auto makers repurchase cars only if problems are serious and beyond repair.
"Usually the ones they buy back are the worst ones--the ones they can't repair. But if the manufacturer can't fix it, how can anyone else fix it?" asked Rosemary Shahan, president of Motor Voters.
The DMV made the allegations against Chrysler on Aug. 17 in an administrative filing. It did not become public until Wednesday, when Motor Voters obtained a copy.
The charges will be heard by an administrative law judge, who will recommend a decision to Department of Motor Vehicles Director Frank S. Zolin. Zolin may accept or reject the judge's decision, or render a decision of his own.
In its charges, the DMV accused Chrysler of fraud and deceit in connection with the sale of the vehicles. The agency said Chrysler failed to include a statement disclosing that the car was repurchased because of a defect. The law also requires manufacturers to tell buyers what was wrong with the car, which the DMV said Chrysler failed to do.
The DMV said only that its investigation resulted from a consumer complaint. But San Francisco lemon law attorney Brian Kemnitzer said he turned over to the DMV records on 150 Chrysler vehicles that had been repurchased under the lemon law and resold to dealers at Golden Gate Auto Auction in Hayward. Auction officials could not be reached.
The GM case involved 51 cars repurchased by the manufacturer and 34 Northern California dealerships, which were also charged. A DMV spokesman said the settlement with GM barred the agency from discussing the case.
Under California law, a new car is considered a lemon if a substantial defect affecting the use, value or safety of the car remains after four repair attempts or 30 days in the shop during the first year. Here are steps the consumer organization Motor Voters recommends to consumers who own lemons.
* Try to resolve problem with the dealer. Keep all work orders and records of repair attempts.
* If that fails, write the manufacturer. The address is in the owner's manual.
* If you're still not satisfied, check to see if the manufacturer has an arbitration program. If so, you may file a complaint with the arbitration board. Typically, a hearing is granted within 40 days.
* If you lose in arbitration, or if your vehicle manufacturer does not have an arbitration program, you may sue. A case may take up to a year to get to court. If you allege your car is unsafe or inoperable, it must be stored during that time. * If you believe you have purchased a car previously designated a lemon, you can also file a complaint with the state Department of Motor Vehicles.