A new law in the Canadian province of Manitoba will require used car dealers to provide detailed information about their car, including repair history and damage. This new law sets out to protect consumers from purchasing lemons, which in this case would be very low value cars for an undeserving price. This new law came about because over 130 lemons from the United States were being brought over to Manitoba and sold as lemons, since they didn’t have to reveal any information about their car as opposed to where they were selling in the US. One problem with this new law is that it only requires dealers to provide documentation about their used cars, where individual sellers will not be required to follow the new law. Nick Roberts of the Used Car Dealers Association of Manitoba believes that this discrepancy is not fair, saying that this law should apply to everyone.

However, I believe dealers may now have the upper hand. By identifying car histories and letting the customers know more about what they are buying, more consumers will want to purchase from used car dealers rather than individuals. The profit margin may then decrease per car, but I would expect the total number of cars sold to increase and overcompensate for the individual losses. I also believe that the percentage of “good” cars vs. “lemons” will increase now that documentation must be provided because individuals looking to sell their cars will be able to get a good value by selling to a dealer because the dealer will now have to produce good quality cars to have a good business. So by buying more good cars, a dealer will be able to sell more cars in general, and probably at higher prices. This change will in turn help consumers because they will be provided with more information and more likely a higher selection to choose from. The price of used cars might shift upward a bit due to the improved selling conditions that the dealers are now providing. Perhaps the scenario that dealers fear most is that they will no longer have any shot at selling really bad cars because no one would ever buy something that is dysfunctional, especially if they know that beforehand.

http://www.cbc.ca/consumer/story/2008/04/25/lemon-law.html