BMW settles suit over demo vehicle warranties

BMW of North America has settled a class-action suit on behalf of buyers of more than 104,000 dealership demo vehicles that were sold as new although the vehicles' four-year warranty periods had already begun.

Members of the class bought the "new" vehicles between Sept. 28, 2006, and Oct. 6, 2014, according to the federal court decision approving the settlement. The warranties kicked in not on the dates customers purchased the vehicles but instead on the dates the vehicles were sold to the dealerships as demo cars, the court said.

Under the agreement that came after mediation, BMW is extending the length of its Ultimate Warranty on those vehicles for at least three months. It also agreed to reimburse purchasers whose warranties had expired for out-of-pocket repair costs that would otherwise have been covered. The reimbursements apply to repairs made within three months of a warranty's expiration.

BMW did not admit any wrongdoing in the settlement.

In approving the final agreement, U.S. District Judge Claire Cecchi in Newark, N.J., said the settlement "represents a fair, reasonable, and adequate result" for the purchasers.

The agreement does not apply to leased vehicles.

The case was filed in September 2012 by Sanjay Saini, who bought a 2011 BMW 335d from a dealership in Sterling, Va. Saini's purchase order identified the 335d as a "new" vehicle; however, he learned later it had less than the promised four years of Ultimate Warranty coverage, according to the complaint.

The suit sought damages for violation of New Jersey consumer protection law and breach of contract. It alleged that BMW "maintained a corporate policy of failing to provide warranty coverage for demonstration vehicles sold by BMW dealers as 'new,' thereby depriving class members of valuable warranty coverage," according to Cecchi's decision.

In her ruling, Cecchi said the agreement "provides substantial relief to the class members," but she didn't put a precise price tag on the value of the settlement. Instead, she said that when multiplied by the number of eligible vehicles, the aggregate value to the class members of extended warranty coverage was between $12.2 million and $12.8 million, excluding reimbursement of out-of-pocket expenses for any class members who were denied warranty coverage.

The plaintiff's expert witness estimated the retail cost of comparable aftermarket extended warranty coverage for three months at $263.43 to $316.80 for each class member.

Cecchi also awarded $600,000 for the plaintiff's attorney fees and litigation costs, an amount BMW agreed to.

A BMW spokesman said the company had no comment. The plaintiff's lead lawyer didn't respond to requests for comment.