What car dealers now need to know about the new changes to the reversal of the burden of proof

Used car dealers must prepare for massive changes in 2022

New EU regulations completely change the used car trade and force car sellers to act

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Change in the legal situation

As part of the implementation of the EU Sales of Goods Directive, used car dealers will have to prepare for new challenges from next year, which will affect their day-to-day business, among other things. An adjustment to the reversal of the burden of proof means that the statutory warranty period will double from six to twelve months. In future, dealers will therefore bear the burden of proof for defects for a full year after the sale of a vehicle.

In addition, the warranty now also covers digital content, e.g. permanently installed navigation systems. The directive also provides more transparency when concluding contracts and requires car sellers to disclose defects or a shortening of the limitation period for warranty services in a separate document.

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Difference between warranty and guarantee

The so-called liability for material defects or warranty refers to the legal responsibility of the retailer to pay for defects or damage within the warranty period. Buyers have the right to repair this damage or compensation. If the repair has been carried out sloppily or is impossible, the buyer has the right to withdraw from the contract.

In principle, the buyer is obliged to prove that the damage occurred before the contract was concluded, but the law provides for the burden of proof to be shifted to Seller for a limited period after the purchase. As it will be difficult in practice to prove that damage only occurred after the contract was concluded, Seller will usually end up having to pay for the damage.

The situation is different with the warranty, which is granted voluntarily by the dealership or manufacturer. This is exempt from legal requirements. This means that any warranty claims that go beyond the statutory warranty can be agreed.

Consequences for the used car market

The change in the law from January 2022 has far-reaching consequences for buyers and dealers. For private purchases, the extended warranty increases buyer protection and provides more security when buying a used car. For retailers, the ruling is less positive; from next year, they will be obliged to be able to prove for 12 months after the conclusion of the contract that material defects or, more recently, defects in digital content did not exist at the time of purchase.  

As a result of these legislative changes, the sale of older used cars to private customers in particular can become a loss-making business. It is therefore worth making a new decision on the use of used cars and selling older vehicles to dealers more frequently.

Where does the retailer need to take action?

To ensure that the trade in used cars in 2022 meets the new requirements of the EU regulation, dealers must pay attention to a number of things. When the new law comes into force, Seller will be obliged to inform the consumer of any deviations from the objective requirements of the vehicle in the sales contract and a separate document before the contract is concluded. What sounds complicated at first means that all defects that deviate from the usual standard must be disclosed.

It was also decided that the limitation period for claims for material defects may continue to be reduced from two years to one year, but the dealer must inform the buyer of this in a separate document. Car dealers should therefore draw up such a document with immediate effect and have it signed every time a contract is concluded from the beginning of next year. In this document, the used car dealer must also draw attention to future updates of digital content (e.g. map data from the navigation system).

In addition to changes to contract documents, used car dealers should also recalculate part of their business against the backdrop of rising used car prices. Representatives of the independent car trade see the change in the law as a threat to the market for older used cars. Dealers must therefore weigh up whether the sale of older vehicles to the end customer with the extended warranty is still profitable at all.

How car dealers can avoid the new risks

Selling to dealers offers a solution to dealers' problems. When trading between dealers, the warranty law does not apply, which is why you can sell vehicles quickly and without risk. Especially if, as is the case with CarOnSale, fees are only incurred when the sale is successful, selling to dealers is recommended. As a digital marketplace for used cars, CarOnSale offers dealers access to over 20,000 bidders throughout Europe. Selling via CarOnSale is easy, profitable and personal. In this way, CarOnSale offers dealers the opportunity to create new digital sales channels so that used car dealers can continue to run a successful business despite drastic new regulations.