All used cars sold in the United States would carry a window sticker informing consumers of the car's ills if the Federal Trade Commission adopts a staff proposal made public yesterday.
The proposal would require used-car dealers to inspect all cars and disclose the results on a uniform sticker by marking boxes for each major component of the car "OK" or "NOT OK." The dealer would have to note on the sticker the estimated cost of the repairs for the items that are marked "NOT OK."
The sticker also would contain information on whether the car was being sold "as is" or what the warranty includes, its past use if the dealer knows and whether the mileage reading on the odometer is correct. In addition, the sticker would explain to consumers that the dealer's description of the car is a binding part of the contract under state laws and the buyer has the right to sue in state court if the dealer has misrepresented the condition of the car or terms of the sale.
"Information establishes the sale of defective used motor vehicles as a major consumer abuse," the staff report to the commission said. "The defects are highly material affecting the basic safety or utility of the most expensive item may consumers will ever buy." The average price of a used car from a franchised dealer is about $2,000, according to the FTC.
At least 10 percent of the used-car sales a year are "troublesome" in that they fail to disclose major defects or are confusing in their warranty terms, according to Bernard J. Phillips, the FTC's project director for its used-car sales proceeding.
Although the used-car industry has contended that such a proposal would increase th cost of a used car by an average of $200 - a contention it repeated yesterday - Phillips said an inspection program in Wisconsin cost an average of $15 a car but that prices of the cars had dropped in the neighborhood of 3 or 4 percent after the Wisconsin rule went into effect.
The National Automobile Dealers Association complained yesterday that dealer's costs would go up under the proposed rule while private sellers, who amount for 50 percent of used car sales wouldn't be covered.