Do a Demonstrator's Dealer Miles Count Toward Hawaii's First 24,000 Miles of Operation?

A demonstrator reaches its first buyer with miles already on it, and Hawaii's lemon law counts miles twice. In Hawaii State Legislature, HRS § 481I-2, the lemon law rights period, which governs repair counts, written notice and the deadline to sue, ends no later than the first 24,000 miles of operation. The reasonable offset a refund deducts for use is measured in miles “attributable to a consumer”. One phrase names an owner. The other does not.

For a new car the gap is small: the state's worked example subtracts 14 delivery miles from an odometer reading of 10,041. For a demonstrator it can be thousands. Take one sold at 6,000 miles and driven 1,500 miles a month. If 24,000 is an odometer reading, the period closes after 18,000 of the owner's miles, at month 12. If it counts the owner's miles, it closes at 30,000 on the odometer, at month 16. With a one-year limit on suits, the deadline lands at month 24 under one reading and month 28 under the other.

Two definitions, two ways of counting a mile

The definition in full: the period “means the term of the manufacturer's express warranty, the period ending two years after the date of the original delivery of a motor vehicle to a consumer, or the first 24,000 miles of operation, whichever occurs first.” Three limbs; the earliest ends the period. The two-year limb starts at delivery to a consumer. The mileage limb, as printed, carries no starting point and no driver.

A consumer is “the purchaser, other than for purposes of resale, or the lessee of a motor vehicle”, plus anyone the vehicle is transferred to during the warranty and anyone else entitled to enforce it. A dealer holds a demonstrator for resale, so delivery to a consumer is the retail sale.

Demonstrators enter through the motor vehicle definition, which has three numbered parts and four lettered inclusions. Part (1) covers self-propelled road vehicles used primarily for personal, family or household purposes. Part (2) includes (A) motorcycles, but not motor scooters; (B) a demonstrator, meaning a vehicle “assigned by a dealer for the purpose of demonstrating qualities and characteristics common to vehicles of the same or similar model or type”; (C) an individually registered vehicle used for business as well as personal purposes; and (D) a vehicle of a sole proprietorship, corporation or partnership that buys or leases no more than one vehicle a year, used personally as well as for business. Part (3) excludes mopeds, motor scooters and vehicles over ten thousand pounds gross vehicle weight rating.

The offset “means the number of miles attributable to a consumer up to the date of the third repair attempt of the same nonconformity which is the subject of the claim”, or up to the first repair attempt of a defect likely to cause death or serious bodily injury, or up to the thirtieth cumulative business day out of service, whichever occurs first. Then the rate: “The reasonable offset for use shall be equal to one per cent of the purchase price for every thousand miles of use.”

So one section uses two measures: miles attributable to a consumer, which begin at retail delivery, and miles of operation, whose text leaves open whether the dealer's miles count. A business day, which matters below, is “any day during which the service departments of authorized dealers of the manufacturer of the motor vehicle are normally open for business.”

What the state's own worked example subtracts

The current Hawaii DCCA, The Hawaii Lemon Law and the State Certified Arbitration Program: A Consumer Handbook (Rev. 06/18/21) lists coverage as “a new motor vehicle (includes cars, motorcycles, autocycles, and demonstrator models).” Its sample refund table gives a purchase price of $27,995.00 and, in the next row, one percent of it, $279.95. The mileage row reads 10,041 minus 14 equals 10,027, glossed “(Mileage at repair less mileage at purchase)”. Divided by 1,000 that is 10.03, and $279.95 times 10.03 is printed as $2,808.00, which is $2,807.90 rounded to the dollar. The division row, labelled “Mileage at 3rd repair”, carries the net figure; the gross would give 10.04. The same subtraction appears in Hawaii DCCA, Consumer Handbook, 2013 edition (Rev. 05.21.13).

A footnote says which reading feeds it: “Mileage on the 3rd repair order is normally used, however, if the defect was one likely to cause death or serious bodily injury, mileage at the 1st repair attempt will be used, or if the 30-day presumption applies, the mileage on the repair order on the 30th day will be used, whichever occurs first.” That matches the statute's three cut-off events.

The handbook's rights-period sentence carries no subtraction: “Assuming the express warranty is still in effect, the Lemon Law Rights Period expires two years after the date of the original delivery of the motor vehicle to a consumer or the first 24,000 miles of operation, whichever occurs first.” Neither does Hawaii DCCA, Notice of Consumer Rights Under Hawaii's Lemon Law for New Motor Vehicles (09/2022), the form dealers hand buyers, which repeats the statutory list ending “the first 24,000 miles of operation, WHICHEVER OCCURS FIRST.” For the handbook's sample car the difference is 14 miles. For a demonstrator it is the dealer's whole use.

One demonstrator, two readings of the first 24,000 miles Odometer miles. Sold at 6,000. Window under each reading of HRS 481I-2. Dealer demonstration miles to 6,000 Reading 1, odometer: closes at 24,000 (18,000 owner miles) Reading 2, owner miles: closes at 30,000 on the odometer 6,000 15,000 24,000 30,000 Offset under either reading counts owner miles only: a third repair at 15,000 counts 9,000 miles.

A demonstrator sold at 6,000 miles

Assume the demonstrator sells for $40,000 at 6,000 miles, the buyer drives 1,500 miles a month, and, in the handbook's phrase, the express warranty is still in effect. The two-year limb closes at month 24, so the mileage limb ends the period under either reading: at month 12 with the odometer at 24,000 and 18,000 owner miles, or at month 16 with the odometer at 30,000. Hawaii State Legislature, HRS § 481I-3 keys several rules to that date.

Subsection (a) imposes the repair duty when the consumer “reports the nonconformity in writing to the manufacturer, its agent, distributor, or its authorized dealer during the term of the lemon law rights period”, and the duty holds “notwithstanding the fact that such repairs are made after the expiration of such term.” The DCCA notice tells buyers: “If you received this notice, you must give the manufacturer written notice of the defect before the Lemon Law Rights Period expires.” Here that is month 12 or month 16.

The presumptions in subsection (d) need their events inside the period. Suppose one defect brings the car back at months 4, 9 and 14, at odometer readings of 12,000, 19,500 and 27,000. Under the owner-miles reading each visit falls inside the period. Under the odometer reading the third comes two months late and the three-visit presumption fails on that defect, although a timely written report keeps the repair duty alive. The thirty business days of the out-of-service branch must also fall inside the period, so the shorter reading leaves fewer days in which to reach thirty.

Subsection (j) sets the outer limit: “Any action brought under this section must be initiated within one year following expiration of the lemon law rights period.” The handbook gives the arbitration version, a request filed “within one year after the Lemon Law Rights Period expired.” That puts the deadline at month 24 or month 28.

Same car, same driving, two filing deadlines Months after retail delivery at 1,500 miles a month. Dark: rights period. Light: one year to begin an action. Odometer reading closes month 12 action by month 24 Owner-miles reading closes month 16 action by month 28 Red lines: repair visits for one defect at months 4, 9 and 14. Third visit, month 14 (odometer 27,000): outside the odometer reading's period, inside the owner-miles period. Dashed line: two-year limb at month 24. It does not bind here, because both mileage readings close first.

The offset runs the other way. If an earlier defect's third repair comes at month 6, the odometer reads 15,000 and the buyer has driven 9,000 of those miles. At one percent of $40,000, or $400 per thousand miles, the owner-miles offset is $3,600; the whole odometer would give $6,000. The $2,400 gap is the dealer's 6,000 miles.

The result is lopsided. The statute's words take the dealer's miles out of the offset. Whether they come out of the 24,000 turns on a reading of miles of operation that none of the Hawaii sources retrieved here states. Planning on the shorter window costs nothing; planning on the longer one and being held to the shorter can cost the presumption, the notice deadline and four months of filing time. A related question about which miles enter a deduction formula comes up in The Repair Order's piece on New York's lemon law mileage deduction formula.

What the offset subtracts One percent of purchase price per thousand miles. Bar length to scale in dollars. Handbook example: 10,041 minus 14 = 10,027 miles; 10.03 x $279.95 $2,808.00 printed Demonstrator, owner miles: 15,000 minus 6,000 = 9,000 miles at $400 per thousand $3,600 Same car, whole odometer of 15,000 miles at $400 per thousand (not the statutory measure) $6,000 Gap: $2,400, the dealer's 6,000 miles at $400 per thousand.

The 1999 bill that tried to name demonstrators

Hawaii State Legislature, S.B. No. 1579 (Twentieth Legislature), posted in the 2000 session files with a 1999 header and no draft designation, describes itself in one line: “Clarifies that the lemon law rights period applies to the purchase of a new or demonstrator motor vehicle.” Its proposed definition opened “in the case of the purchase of a new or ‘demonstrator’ motor vehicle” and still measured “the period covering the first 24,000 miles of operation”, leaving the operator unnamed. The codified definition has no such opening clause; demonstrators sit in part (2)(B) of the motor vehicle definition. The history note on 481I-2 lists amendments in 1998, 2000, 2008 and 2010. Which act placed the word there, and whether S.B. 1579 passed in any form, was not retrieved. The codified text governs and is the text quoted here.

Section 481I-3, letter by letter

The section has twelve lettered subsections and eight numbered branches.

  • (a) The repair duty, surviving the period.
  • (b) Replacement, or a refund of the full purchase price and “all collateral and incidental charges, and less a reasonable offset for the consumer's use” of the vehicle, plus a possible offset for damage beyond normal wear unless the nonconformity caused it.
  • (c) A defense for abuse, neglect or unauthorized modification by a consumer.
  • (d) The presumption, in three branches: (1) the same nonconformity examined or repaired at least three times and still present; (2) a defect likely to cause death or serious bodily injury, examined or repaired at least once and still present; (3) thirty or more cumulative business days out of service during the period. The period and the thirty days extend while war, invasion, strike, fire, flood or other natural disaster makes repair services unavailable. And “The presumptions provided in this subsection shall not apply unless the manufacturer has received a written report of the nonconformity from the consumer and has had a reasonable opportunity to repair the nonconformity alleged.” After a second notice, or more than twenty business days out of service, the dealer must notify the manufacturer.
  • (e) Repair orders, covered below. (f) Access on request to inspection or test reports and service bulletins.
  • (g) and (h) A notice of rights at sale, and a buyer's duty to notify the manufacturer that turns on receiving it.
  • (i) An arbitration decision within forty-five days, with remedies including (1) a replacement or (2) return and refund. (j) The one-year limit on actions.
  • (k) Resale of a returned vehicle only with (1) a signed defect disclosure, (2) the defect corrected and (3) a manufacturer warranty covering a recurrence “within one year or 12,000 miles after the date of resale, whichever occurs first”.
  • (l) A violation of (k) is prima facie evidence of an unfair or deceptive practice under chapter 480.

Set (k)(3) beside 481I-2. There the mileage has a starting date in its own sentence. The 24,000 has none.

What the record has to show

  1. The odometer at delivery, and proof of demonstrator status. The handbook's letter form has a field for “Odometer Reading at Date of Purchase”. The offset subtracts that figure, and under the odometer reading it fixes how much of the 24,000 the dealer used.
  2. Every repair order. Subsection (e) requires an itemized statement each time the vehicle returns from warranty diagnosis or repair, showing among other things “the date and the odometer reading when the vehicle was submitted for repair, and the date when the vehicle was made available to the consumer.” These are the readings the handbook's footnote uses.
  3. The written report to the manufacturer, sent before the shorter reading closes. The 2013 handbook advised: “Send a letter by certified mail, return receipt requested to the manufacturer within the Lemon Law Rights Period.”
  4. A business-day count on dealer service-department days: more than twenty triggers the dealer's notice, thirty supports the presumption.
  5. Both closing dates, each checked against the two-year date and the warranty term. The filing limit runs from whichever applies, so the file should not rely on the later one.

The handbook's arbitration demand form asks for the odometer reading at application and has an odometer column in its repair table. Which document sets what a repair invoice must carry is a separate question, taken up in The Repair Order's article on a DMV rule that sets what a repair invoice must show. In Hawaii the requirement sits in the lemon law itself.

Numbers to Re-check

  • 24,000: the mileage limb in 481I-2, the DCCA notice of 09/2022 and both handbook editions, printed each time as miles of operation with no subtraction.
  • 10,041 minus 14 equals 10,027; over 1,000 that is 10.03; times $279.95, one percent of $27,995.00, it prints as $2,808.00, or $2,807.90 to the cent.
  • Months 12 and 16, then 24 and 28: closing points and action deadlines for a demonstrator sold at 6,000 miles and driven 1,500 miles a month. Illustrations, not statutory figures.
  • $3,600 against $6,000: the offset at a third repair at odometer 15,000, counting the buyer's 9,000 miles or the whole odometer, at $400 per thousand on $40,000.
  • Thirty and more than twenty business days: the presumption branch and the dealer's notice trigger in 481I-3(d), counted on service-department days.
  • 12,000 miles: the resale warranty in 481I-3(k)(3), the one mileage in that section tied to a starting date in its own sentence.

Where this framework does not apply

It does not reach a vehicle sold after the express warranty has ended. The handbook says coverage “also includes a car transferred to a second purchaser while the manufacturer's written warranty is still in effect.” A second owner meets a version of the same question, but the arithmetic above was built for a demonstrator's first retail sale.

It does not reach the vehicles part (3) excludes, and it does not take up the offset questions that business use raises for vehicles under parts (2)(C) and (2)(D).

It does not decide the warranty limb. When a demonstrator's warranty term starts is left open, because no warranty document was examined here. If a warranty ran from a date before the retail sale, that limb could close before either mileage reading. And a buyer who drives little enough reaches month 24 first, where both readings give the same date.

What would invalidate this

First, the session laws in the history notes, including the 2000 act cited on both sections, and any committee reports were not retrieved; one saying the mileage runs from retail delivery would settle the open question. Second, the department's administrative rules for the arbitration program, and any arbitration decisions applying the rights period to a demonstrator, were not retrieved. Third, no Hawaii court decision on the point was located. Fourth, the statutes, the bill, the notice and both handbooks were read as extracted text in short verbatim excerpts, so the bill's added and deleted words could not be told apart, and subsections (f) to (h) of 481I-3 appear here as summaries. Anyone relying on these figures should read 481I-2 and 481I-3 in full in the codified text and check for any amendment after 2010.

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