Damon Ridge still remembers taking a deep breath before buying his $12,000 car, the biggest purchase he had ever made in his life.

Although it was an older four-wheel drive, he hoped it was a reliable car that would get him to his part-time job at a restaurant in regional Victoria.

"I was excited — it was my first car I bought by myself," the 27-year-old said.

"I was nervous."

But on the two-hour drive home from the Melbourne dealership, Simple Cars in Ringwood, there were immediate problems.

The indicators did not work and there was a concerning noise during gear changes.

The dealer fixed most of the car's immediate problems, but Mr Ridge started to wonder if he had made a huge mistake.

New research from the Consumer Policy Research Centre (CPRC) has found many people have experienced similar issues when buying both new and second-hand cars.

It surveyed more than 1,000 consumers who had purchased at least one new or used car in the past five years in Victoria, and found more than half said they had bought a vehicle with some sort of fault.

Of those surveyed, 17 per cent said their car had a major safety fault such as the engine suddenly cutting out or the transmission failing.

"Too many faulty cars are sold, dealers aren't fixing problems they should, and the complaints process doesn't have consumers' backs in the way it should either," report author and head of CPRC Erin Turner said.

Car dramas continued

For Mr Ridge, the problems with his 2000 Mitsubishi Pajero only got worse, and it started to stall and blow thick, blue smoke.

His mechanic told him he believed oil was leaking into the motor's combustion chamber due to damaged piston rings or seals.

The mechanic suspected a product used to mask engine problems had been added to the engine prior to Mr Ridge's purchase.

He said repairs would cost more than half of its value, which shocked Mr Ridge who had only driven 2,000 kilometres in the car.

The car ended up sitting in his driveway, and he found himself forking out money for his car loan, as well as ride-share and taxis to get to and from work.

"Most of the time [the car] was sitting in my driveway, just sitting there gathering dust and rust, and then cobwebs, or it was in the mechanics getting fixed when I could afford to fix it," he said.

Mr Ridge's request for free repairs or a full refund from the car dealership were denied.

Desperate, he lodged a dispute with the Victorian Civil and Administrative Tribunal (VCAT), a process he said was complicated and slow.

Eventually, he enlisted the help of the Consumer Action Law Centre, which paid thousands of dollars to have it assessed by an independent expert mechanic, money he never could have afforded.

The expert found "the vehicle was unroadworthy, unsafe and in mechanically poor condition at the time of the sale," and the total cost of repairing it would, "far exceed the current value".

He also found the evidence that "strongly suggests" an additive such as Stop Smoke was used prior to its purchase, possibly to mask the engine's symptoms.

More than 18 months after his purchase in 2021, he reached an agreement with Simple Cars and received a full refund.

Simple Cars declined to be interviewed for this story.

In response to detailed questions about Mr Ridge's case, the dealership said in a statement:

"The matter in question has been resolved amicably through mutual consent…

"We appreciate the open and constructive dialogue that allowed us to reach a satisfactory resolution. As a result, we have no further comments to add.

"We would like to express our gratitude to Damon for his patience, understanding and cooperation throughout this process. It is our firm belief that resolving issues in a mutually beneficial manner fosters positive relationships and paves the way for [the] future."

The CPRC said many other consumers were not so lucky.

It is calling for national consumer law to impose penalties on dealers who fail to provide a remedy like a repair for consumer guarantee failures and an overhaul of how people can get help.

"The worst that can happen to them (dealers) is that a tribunal or a regulator can turn around and say, do what you were meant to do, originally, repair that car," Ms Turner said.

The Australian Competition and Consumer Commission (ACCC) has been calling for penalties to be imposed on companies that do not fix or replace faulty goods, including motor vehicles, for a number of years.

The ACCC continues to advocate for law reform in this area.

In a statement, the ACCC said it was also aware consumers were having trouble finding remedies through state-based tribunals and small claims courts and was looking into the area along with ASIC and state-based consumer affairs bodies.

Automotive body denies issue in the industry

The car industry peak body in Victoria has disputed that the selling of faulty cars was widespread.

"A lot of those complaints, in our view, are minor issues with vehicles," CEO of the Victorian Automotive Chamber of Commerce Geoff Gwilym said.

"When we talk to our dealers, they tell us that many, many customers go back to them complaining of major faults in vehicles, and generally they're not major faults.