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Is Chrysler reselling duds?

DETROIT — Chrysler has spent $1.3 billion since 1993 buying back vehicles with chronic defects, then reselling the bulk of these "lemons" to consumers, a safety group says Chrysler documents show.

The automaker said the documents unsealed last week in North Carolina show no wrongdoing and are being mischaracterized by consumer groups and product-liability attorneys.

"The notion that this company engages in wrongdoing is total distortion," said Lew Goldfarb, Chrysler's associate general counsel.

Chrysler was bought by Germany's Daimler-Benz in 1998 and is now a unit of DaimlerChrysler.

According to the documents, Chrysler said it repurchased more than 50,000 vehicles with persistent mechanical problems, then recouped about two-thirds of the investment reselling the majority of them at auction to dealers.

The papers show "the extensive corporate-level involvement in a process that historically had been dismissed as the misbehavior of a few rogue dealers," said Ralph Hoar, head of Safety Forum, an advocacy group that posted some of the documents on its Web site.

Chrysler said dealers are always told which vehicles have been bought back from customers, and must relay such information to consumers.

Ford Motor Co. spokesman Mike Vaughn said repurchases last year accounted for less than 1 percent of 4 million new vehicles the automaker sold nationwide. Ford holds a vehicle's title until it gets a form signed by the consumer acknowledging he or she has been told of any prior problems with the vehicle, Vaughn said.

Consumer advocates say "lemon laundering" is widespread and want the Federal Trade Commission to require automakers to tell consumers about their duds. A few years ago, the FTC held hearings on lemons at the request of the consumer groups, but no action has been taken.

No one knows how many buybacks automakers make, partly because different state laws make it hard to track such transactions.

Phil Nowicki, a consultant on lemon laws, estimated that 75,000 of the roughly 45 million used vehicles sold yearly nationwide have been repurchased by the manufacturer under a lemon law decision or settlement. He believes few consumers are aware they have bought a repurchased vehicle.

Under a plan by consumer groups, a used car buyer could check the vehicle's identification number on an Internet database to find out if the manufacturer bought back the vehicle from an unsatisfied customer. The groups would like each search to be free or cost no more than $2.

Consumer groups also want a permanent label affixed to the car identifying it as a "lemon law buyback."

Auto industry groups say that while they support full disclosure of a vehicle's history, they object to labeling every buyback a lemon.

In some states the industry has convinced lawmakers that a more accurate label should read "manufacturer buyback," though consumer advocates consider that confusing.