When is a Lemon not a Lemon?
When life gives you lemons, make lemonade.
- Dale Carnegie
Anyone who has been involved in the buying and selling of automobiles for any length of time has some familiarity with the term “lemon”, as it relates to cars - enthusiasts like us, even more so. But first, some background, so we all have a common point of reference.
If you don’t know, for those of us in Washington State, the law defines a car as a lemon if it “has one or more substantial defects that have been subject to a “reasonable number of attempts” to diagnose or repair the problem(s) under the manufacturer’s warranty.” Typically, the manufacturer gets two attempts to fix the defect before you can invoke the law.
All states have lemon laws, according to KBB.com, but the specifics on what defines a lemon and what rights you have as a consumer vary by state. One aspect of lemon laws can result in requiring the dealer to buy back the vehicle from the buyer and resell as a lemon at auction. Many states brand the title if a car is a lemon to give you full information if you are buying a used car, but not all. This can lead some unscrupulous sellers to “title wash” lemons by registering a vehicle in a state without a branding requirement, to then title it again in another state that has one but the car now has a “washed” title. The good news is a number of other tools, such as online purchasing sites (like Autotrader, etc.), and Carfax can tell you the cars complete history so you can be sure.
In some markets there are used car dealers who specialize in finding good deals at auction on lemon law buyback cars, where the dealership was required to buy back the vehicle. I know not everyone is a fan of these dealerships, and I am not necessarily advocating for them, but they do provide a service and I personally have no issue with this, as long as the dealer is upfront about the branded titles.
This leads me to the point of this missive - my story of how, in 2011, I bought my 2008 335i, from one of these dealerships which specialized in higher end cars (they had buyback Lamborghinis and McLarens, if you can believe it), when I lived in Georgia. As my wife likes to chide me, we went out shopping for a truck for her on that particular Saturday, and ended up driving home in the 335i. We have actually refered to the car as “the truck” from time to time. It is a convertible, and I’ve actually hauled things in the back seat with the top down that wouldn’t fit otherwise, so may be it is a small truck. And, for the record, we bought her an F250 a few years later so I redeemed myself.
Why did I take the risk? Because, you can save a lot of money if you do your research on why the car was designated a lemon and understand the other implications of owning a branded title car. And at the time, I couldn’t have afforded that car at a normal used car price.
My three key pieces of data that helped me decide car was worth the risk were what caused the buyback, what the discount price was, and understanding the long term effect on the resale value (it can be significant!). For this car, I was able to see, via Carfax, that the car was purchased new in 2008 and the only significant issue mentioned was that the High-Pressure Fuel Pump (HPFP) had been replaced three times in three years and less than 30K miles. For those who remember that time period, BMW had a horrible run of bad HPFP’s in their cars - it even resulted in a class action lawsuit. Since I was fully aware of this issue at the time, I fully inspected and test drove the car and it had no other red flags. I also did research about the effect of a branded title on resale value. It can be significant, but since I tend to keep cars for the long term, I decided I would be OK keeping the car till it died, therefore resale value didn’t matter to me.
The end result? 14 years later, the car now has over 200K miles. No major issues. Original engine, original turbos (if you can believe it!) Only real breakdowns I have had in 170K miles of ownership were a failed water pump (common BMW issue), and a failed ECU MOSFET (another known issue from this era). Both occurred years after the purchase. They were also things I was able to address as I work on my own cars. So, as I stated in the title: sometimes a lemon is not a lemon - if the circumstances are right and you have the right information. It also helps that I am obsessive about preventive maintenance.
Does this mean I am enthusiastically advocating purchasing dealer buyback cars, in general? Absolutely not. But you should know that if you research a car’s known issues online, compare that to the cars history and reason for buyback, and are willing to keep the car long term to mitigate the poor resale value, you may be able to make lemonade out of that lemon. I did, but, as always, Caveat Emptor.
