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I Understand

From Dream Cars to Nightmares: A Consumer’s Sour Tale

July 2024

By Nurul Izzah binti Jafri

The concept of ‘Lemon Law’ originated from the United States, which provides a relief for consumers who purchase cars that continuously fail to meet quality and performance standards, colloquially referred to as a ‘lemon’. This law, designed to protect consumers from such defective products, has been adopted in various jurisdictions around the world, including South Korea, China, the Philippines, and even our neighbouring country, Singapore.1 Recently, there has been much attention on social media regarding a defective car which triggered the discussion for the need to implement a Lemon Law regime in Malaysia.

A. The ‘Perodua’ and ‘Honda’ Cases

On 17 October 2023, S. Nagakanni excitedly brought her new Perodua Bezza car home from a local sales centre in Segamat, Johor. However, her joy quickly turned to frustration when the car failed to start just eight hours later. A trip to the Perodua service centre the next day revealed a damaged engine, leaving Nagakanni in a difficult situation.

Seeking a solution, Nagakanni requested a replacement from Perodua’s headquarters, but was informed she would have to wait for a decision, which could take anywhere from two weeks to a month. Nearly three weeks later, on 9 November, Nagakanni received a call from Perodua’s headquarters. According to their early investigation, the car’s engine had been damaged by the presence of “foreign objects such as sugar” in the engine, which Nagakanni found perplexing as she had not introduced any food or drinks into the car.

In an attempt to resolve the issue, Nagakanni was asked to apply for a new loan to purchase a replacement car, a proposition she found unacceptable given that she was still paying off the loan for the damaged vehicle. Faced with months of waiting and no response from Perodua, Nagakanni took matters into her own hands, sharing her story on Facebook. The post quickly gained traction, garnering over 15,000 shares and 6,200 comments from concerned netizens.

After her story went viral, Perodua finally responded, offering Nagakanni two options: a full repurchase of her car or the option to purchase a second car under the same loan terms.2

Nagakanni’s ordeal shed light on the challenges faced by consumers when products fail to meet expectations. Similarly, Noriya Mamat from Terengganu encountered difficulties with her brand-new Honda HR-V.3 After persistent problems with her car, including issues with the headlights and emergency lights, Noriya found herself in a frustrating cycle of repairs. Despite efforts to resolve the issues, Noriya’s problems persisted, leaving her with a car she could not use effectively.

B. Protection under the Consumer Protection Act 1999 (“CPA”)4

The above recent cases on social media added to the growing conversation around consumer rights and product quality. The CPA sets out a minimum threshold in respect of the quality of goods acquired by consumers for private and/or domestic use. Section 32 of the CPA states that such goods must be of “acceptable quality”. The Court of Appeal in the case of Puncak Niaga (M) Sdn Bhd v NZ Wheels Sdn Bhd5 clarified that Section 32 of the CPA is a statutorily prescribed guarantee. In other words, consumers are entitled to expect the goods supplied to them to be of an acceptable quality, irrespective of whether this is expressly covered in the contract of sale between the consumer and the supplier. 

Section 32(2) of the CPA sets out the requirements which must be met before the goods are deemed to be of acceptable quality. The tests for which are as follows:

  1. Firstly, the goods in question must satisfy all of the following requirements before they can be deemed to be of acceptable quality:6
    1. fit for all the purposes for which goods of the type in question are commonly supplied;
    2. acceptable in appearance and finish;
    3. free from minor defects;
    4. safe; and
    5. durable.
  2. Secondly, the consumer must have been fully being briefed on the goods and have full knowledge of the state and condition of the goods, including any hidden defects. The determination of whether a “reasonable consumer” would regard the goods to be acceptable would be based on consideration of the following factors:7
    1. the nature of the goods;
    2. the price;
    3. any statements made about the goods on any packaging or label on the goods;
    4. any representation made about the goods by the supplier or the manufacturer; and
    5. all other relevant circumstances of the supply of the goods.
  3. Thirdly, the alleged defect had been specifically drawn to the attention of the consumer prior to the purchase.8 For example, imagine you are buying a laptop from a local electronics store. The salesperson informs you, “This laptop has been returned by a previous customer due to a small malfunction in the speaker, but we have fixed it and it’s working perfectly now. Are you still interested?” If you decide to purchase the laptop after being made aware of the prior issue and its resolution, the store has not engaged in any unlawful behaviour. The store has openly relayed the product’s history, allowing you to make a knowledgeable choice.

C. Case Law: Poratha Corporation Sdn Bhd V. FA Wagen Sdn Bhd [2021] 1 SMC 250 (“Poratha”)

On 15 March 2013, the manager of Poratha Corporation purchased a Volkswagen Polo Sedan 1.6 for his wife to use to send their children to school. However, after a month of driving, the plaintiff began experiencing issues with the car. Over the following four months, the car required multiple visits to the defendant’s service centre for repairs, totalling eight to ten times.  As the car was still under warranty, the plaintiff decided to leave it at the defendant’s workshop, in October 2013, for proper rectification. While the car was being repaired, the plaintiff had to rent another car at the rate of RM200 per day from 15 October 2013 until 15 March 2016. In early 2016, the defendant finally rectified the problems by changing the defective gearbox and the engine mounting. The plaintiff then collected the car in March 2016 after being satisfied with the condition of the car. The plaintiff commenced the action claiming RM176,600 for loss of use of the car.

The Johor Bahru Sessions Court held that Section 32 and Section 33 of the CPA are applicable in this case. The statutory provisions of ‘acceptable quality’ and ‘fit for purpose’ are wholly applicable in this case because the plaintiff had bought a brand-new car, not a second-hand car. Therefore, it was only right and proper that there should be an implied guarantee that the car sold and delivered by the defendant shall be of acceptable quality and fit for its purpose. The documentary evidence indicated numerous defects in the car, including issues with its gearbox, engine mounting, brake disc, battery and tires, all within a short period after purchase. Further, safety concerns arose due to the defective brake disc that caused juddering when braking, the driver’s seat that keeps moving and not locking in a secure position and defects to the faulty air conditioning that caused ‘sweating’ on the dashboard. The Sessions Court held that it is able to accept such defects present in a second-hand car but not in a brand-new car.

D. Looking Ahead

Interestingly, Judge Mabel S Muttiah SJ, in her remarks,9 urged the government to consider implementing a ‘Lemon Law’ regime to provide remedies for purchasers of cars and other consumer goods to compensate for products that repeatedly fail to meet standards of quality and performance. The judge highlighted that the plaintiff’s car in Poratha’s case was indeed a ‘lemon’, which took over 2 years to rectify. She expressed her view that any significant delay in obtaining a remedy is an injustice to consumers who rightfully expect the product to be in good condition upon purchase. Judge Muttiah suggests the necessity for new legislative measures by Parliament to safeguard unfortunate purchasers facing similar circumstances as the plaintiff in this case. Until such laws are enacted, the public must rely on the judiciary to uphold justice in such matters.

Following the viral Perodua and Honda cases highlighted above, the Consumers’ Association of Penang (“CAP”) has called on the Ministry of Domestic Trade and Cost of Living to implement a ‘Lemon Law’ to hold car manufacturers accountable for defective projects and compel them to repair vehicles in accordance with the law. 10

This is not the first time the CAP has urged the government to do so, as it previously called for the same in 2019.11  During a parliamentary session, the Ministry of Domestic Trade and Cost of Living announced that a feasibility study on the Lemon Law would be conducted this year. Once the study is concluded, a policy decision will be made at the ministry level before implementing the legal framework.12

This material is for general information only and is not intended to provide legal advice. If you have any queries regarding the above, please feel free to contact us at insights@chooi.com.my.

  1. Allison Lai. (2024). ‘Govt should consider introducing Lemon Law for defective products, says consumer group’. The Star. Retrived from https://www.thestar.com.my/news/nation/2024/03/15/govt-should-consider-introducing-lemon-law-for-defective-products-says-consumer-group
  2. Latifah Arifin. (2024). ‘Perodua agrees to buy Nagakanni’s Bezza at full price’ New Straits Times. Retrieved from https://www.nst.com.my/news/nation/2024/01/997834/perodua-agrees-buy-nagakannis-bezza-full-price
  3. Mohd Zaky Zainuddin. (2024). ‘After the Bezza incident, now two-week-old Honda HR-V owner shares the same experience’ New Straits Times. Retrieved from https://www.nst.com.my/news/nation/2024/01/1000680/after-bezza-incident-now-two-week-old-honda-hr-v-owner-shares-same.
  4.  Act 599.
  5.  [2012] 1 MLJ 27.
  6. Section 32 (2)(a) of the CPA.
  7. Section 32 (2)(b) of the CPA.
  8. Section 32(3) & Section 32(4) of the CPA.
  9. [2012] 1 MLJ 27, p. 258-259.
  10. Mohideen Abdul Kader. (2024). ‘Time to have Lemon Law for cars’, New Straits Times. Retrieved from https://www.nst.com.my/opinion/letters/2024/01/1002998/time-have-lemon-law-cars.
  11. Opalyn Mok. (2019). ‘Introduce ‘lemon law’ to protect car buyers, consumer group urges Putrajaya’. Malay Mail. Retrieved from https://www.malaymail.com/news/malaysia/2019/02/14/introduce-lemon-law-to-protect-car-buyers-consumer-group-urges-putrajaya/1723004.
  12. Shahril Abdul Rahman. (2024). ‘Can car buyers get refunds for faulty cars? Malaysia to look into Lemon Law this year’. Malay mail. Retrieved from https://www.malaymail.com/news/malaysia/2024/03/09/can-car-buyers-get-refunds-for-faulty-cars-malaysia-to-look-into-lemon-law-this-year/122375