Issue Date:  -  Wednesday, 18 August 1999

Ministry warns about selling vehicles on consignment

The Ministry of Fair Trading today warned car sellers to be cautious about entering into agreements with motor vehicle dealers to sell vehicles on consignment.

Industry and Consumer Services Director David Hillyard said today the Ministry was aware of two dealerships who had sold vehicles on behalf of consumers, but failed to pass on the proceeds because of the dealers' financial problems.

Formal Inquiry action taken by the Motor Vehicle Dealers' Licensing Board resulted in one Cannington dealership closing in January this year and, more recently, another matter is due for Formal Inquiry before the Board on August 31.

We're saying consumers need to be aware there is a real risk in selling a vehicle on consignment, Mr Hillyard said.

If you put a valuable car in a dealer's yard to sell, you are relying upon that person's business expertise not just to find a buyer, but also give you the money after the transaction is concluded.

Unfortunately there have been about eight cases in recent months in which payments have been delayed or the seller short-changed, Mr Hillyard said.

Selling by consignment means the dealer does not buy the vehicle but acts as an agent to find a buyer.

The benefit is you may get a higher price, but the down side is it involves a third party who receives the money you get for the car, Mr Hillyard said.

Many of those vehicles have been worth well over $20,000.

Mr Hillyard said the Ministry believed it was an isolated problem and the vast majority of licensed car dealers adhered to their contractual obligations.

The industry experiences few problems these days, with dealers in the trade anxious to protect Western Australia's reputation for good service and reliability, he said.

There are no disadvantages for the purchasers of vehicles sold on consignment, with title guaranteed.