CA's lemon law is changing and car buyers have fewer protections in the new year

The year 2025 is shaping up to be a confusing one for Californians unlucky enough to buy a new or used car that turns out to be a clunker.

Starting Jan. 1, car buyers who purchase a faulty vehicle will have to navigate a new version of California's "lemon law" that for five decades has given consumers the right to demand car companies fix or replace defective vehicles they sell.

That is, unless lawmakers quickly pass a law that allows some of the car companies to opt out of the new requirements.

The confusion stems from a law Gov. Gavin Newsom reluctantly signed in late September, after the bill was hastily jammed through the Legislature in the waning days of the session following secret negotiations between lobbyists.

Newsom said it was important to address the problem of California's courts getting clogged with lemon law cases, even as critics said the bill significantly watered down consumer protections.

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But Newsom said he signed it only after lawmakers said they'd introduce legislation next year to make the reforms voluntary for automakers.

Lawmakers have already introduced legislation that they say meets Newsom's demands. It's now anyone's guess how long it will take the bill to make it through the Senate and the Assembly and get Newsom's signature. Meanwhile, portions of the new lemon law take effect Jan. 1; others in April.

Adding to the confusion, a month after Newsom signed the new lemon bill, Assembly Bill 1755, the California Supreme Court ruled that the state's lemon law doesn't require manufacturers to honor a car's warranty when it's re-sold as a used vehicle. Before the Supreme Court's ruling, courts had interpreted the lemon law to require manufacturers to replace or repair a defective used car or truck if the clunker was sold within the window of its original new-vehicle warranty.

The justices said that if Californians have a problem with how they've interpreted the statute, state lawmakers are welcome to write a new bill.

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"Those arguments are best directed to the Legislature, which remains free to amend the definition of 'new motor vehicle' to include used vehicles with a balance remaining on the manufacturer's new car warranty," the court wrote in its Oct. 31 opinion. At least one lawmaker has suggested to CalMatters he and his colleagues could take the court up on that suggestion.

As the Legislature sorts this out, Rosemary Shahan of Consumers for Auto Reliability and Safety said car buyers next year are going to have a tough time figuring out what to do if they drive a lemon off the lot.

"It's going to be really confusing for consumers," she said.

Lemon law cases clog California courts

California's lemon law defines a "lemon" vehicle as one that has serious warranty defects that the manufacturer can't fix, even after multiple attempts. The lemon law applies only to disputes involving the manufacturer's new vehicle warranty.

If the manufacturer or dealer is unable to repair a serious warranty defect in a vehicle after what the law says is a "reasonable" number of attempts, the manufacturer must either replace it or refund its purchase price, whichever the customer prefers, according to the California Department of Consumer Affairs.

Disputes can be resolved through arbitration or in court if a consumer sues. The new lemon law was a compromise between U.S. automakers, consumer attorneys and judges who came together to address a growing backlog of lemon law cases in the state's courts.

The number of such cases in California courts climbed from nearly 15,000 in 2022 to more than 22,000 last year. In Los Angeles County, nearly 10% of all civil filings are now lemon law cases.

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Proponents argue the bill Newsom signed will speed up the process of getting consumers a working vehicle, while setting new procedural rules for the litigation process that will ease the burden on courts.

But Shahan and other critics argue the changes will primarily benefit U.S. car companies, since they're the ones most commonly sued under the state's lemon law at the expense of consumers. Foreign car companies largely opposed the measure.

Shahan says the statistics on lemon law cases show why U.S automakers wanted the rule changed. U.S. car companies have a significantly higher number of lemon law cases in California than their foreign counterparts.

It's also why, if lawmakers pass the bill Newsom wants, the foreign companies are likely to choose to abide by the original version of the lemon law.

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In the meantime, until lawmakers pass the pending legislation, buyers who purchase any defective new vehicle will have less time to sue, and they'll get less money from rebates, according to Shahan and other critics.

The new rules also shrink the period they can use the lemon law to just six years instead of the entire life of a vehicle's warranty, which can last longer, Shahan said.

And because of the Supreme Court's ruling that said new vehicle warranties do not cover the car once it's resold used, plaintiffs such as Mariana Alvarado Rodriguez are now feeling the squeeze.

Court ruling impacts used lemon vehicle disputes

In 2021, Alvarado Rodriguez, a seasonal farmworker who lives in Tulare County, purchased a 2018 GMC Sierra 1500 with 40,002 miles from a Fresno County car dealer for $25,000, according to court records.

Almost immediately after she drove it off the lot, she said the truck started having mechanical problems that she claims should have been covered under the vehicle's warranties. But she said the car's maker, General Motors, refused to honor them. "I kept making payments," she said in Spanish. "Then ... I finally decided to get an attorney and told the dealership, 'That truck, it just doesn't work.' "

A Fresno County judge tossed her lawsuit a year later after the Fourth District Court of Appeal ruled in a separate case that warranties that would apply to new cars don't carry over if the vehicle is sold again. The Supreme Court affirmed that judgment.

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Alvarado Rodriguez said she still doesn't have reliable transportation for when she returns to work this spring in the fruit-packing sheds. "The process has been so long," she said. "It's really, really affected me."

Democratic Sen. Tom Umberg of Santa Ana is one of the authors of the new lemon law reforms slated to take effect next year. He also co-wrote the new legislation in December to address Newsom's concerns. For now, it doesn't address the Supreme Court's ruling that impacted used vehicle warranty claims like Alvarado Rodriguez's.

He said lawmakers will likely take that issue up as well when they reconvene after the holidays.

"I would expect that there would be further conversation," he said. "At least it's my point of view that you don't want consumers to be hoodwinked."

CalMatters reporter Sergio Olmos contributed to this story.