New Mexico Lemon Law (2026): How to Qualify & Get a Refund

New Mexico's Motor Vehicle Quality Assurance Act (NMSA 1978, Sections 57-16A-1 through 57-16A-9) covers new vehicles with a manufacturer's express warranty and presumes a lemon after four or more repair attempts for the same defect, or 30 or more cumulative business days out of service, within one year of delivery or the warranty term, whichever is earlier. The manufacturer (not the consumer) selects between replacing the vehicle or issuing a full refund, less a reasonable use allowance.

What Is New Mexico's Lemon Law?

New Mexico's Motor Vehicle Quality Assurance Act (NMSA 1978, Sections 57-16A-1 through 57-16A-9) protects consumers who purchase or lease new vehicles that turn out to have serious, unrepairable defects. The law requires manufacturers to replace the vehicle or refund the purchase price when repeated repair attempts fail to fix a problem that substantially impairs the vehicle's use and market value.

The Act also includes a separate provision for used vehicles (Section 57-16A-3.1), which prevents dealers from disclaiming the implied warranty of merchantability for a limited period after sale.

What Vehicles Does the Law Cover?

New Vehicle Coverage

The Motor Vehicle Quality Assurance Act applies to new motor vehicles purchased or leased in New Mexico that come with a manufacturer's express warranty and whose gross vehicle weight is under 10,000 pounds. Covered vehicle types include:

• Passenger cars (sedans, coupes, hatchbacks, convertibles)
• Motorcycles
• Light-duty trucks and pickup trucks under 10,000 lbs GVWR
• SUVs and crossover vehicles
• Vans and minivans
• Leased vehicles used for personal, family, or household purposes

Vehicles Not Covered

The following vehicles fall outside the Act's protection:

• Vehicles purchased primarily for business, commercial, or agricultural purposes
• Motor homes (the living quarters portion; chassis components may be covered separately)
• Off-road vehicles not designed for highway use
• Vehicles sold without a manufacturer's express warranty

Who Qualifies as a Consumer?

Under Section 57-16A-2, a "consumer" is a buyer or lessee of a motor vehicle for purposes other than resale. The definition also extends to any person who receives a transfer of the vehicle during the warranty period and is entitled to enforce the warranty. This means subsequent owners who acquire the vehicle while it remains under warranty can also invoke the lemon law.

Coverage Period and Reporting Requirements

New Mexico's lemon law coverage operates within a specific time window. Consumers must report nonconformities to the manufacturer, its agent, or its authorized dealer during the express warranty term or within one year following original delivery of the vehicle, whichever is earlier (Section 57-16A-3(A)). There is no mileage cap in the statute.

This "whichever is earlier" language is important. If the manufacturer's express warranty extends beyond one year, the lemon law coverage still ends at the one-year mark from delivery. Conversely, if the warranty expires before one year, the coverage ends when the warranty does.

Written Notice Requirement

The lemon law presumption (discussed below) does not apply unless the manufacturer has received prior direct written notification from the consumer and has been given an opportunity to cure the defect. If the manufacturer requires written notice before honoring a refund or replacement claim, it must clearly and conspicuously disclose that requirement to the consumer, including the name and address where the notice should be sent.

Your written notice should include:

• Your name and contact information
• Vehicle details (year, make, model, VIN)
• A description of the nonconformity
• A summary of all repair attempts
• A clear statement requesting a refund or replacement

The Lemon Law Presumption

New Mexico law creates a rebuttable presumption that a manufacturer has had a reasonable number of attempts to repair a vehicle when certain conditions are met.

When the Presumption Applies

Business Days: New Mexico counts business days rather than calendar days for the out-of-service threshold. Weekends and holidays when the dealer is closed do not count toward the 30-day total. This standard tends to work in the consumer's favor because it takes longer to accumulate 30 business days than 30 calendar days, giving more time for the defect to reoccur and strengthen the claim.

What Is a Substantial Nonconformity?

The defect or condition must "substantially impair the use and market value" of the motor vehicle. The statute uses the conjunction "and," meaning both use and market value must be affected. Examples of qualifying nonconformities include:

• Engine problems causing stalling, loss of power, or failure to start
• Transmission defects that affect shifting or drivability
• Brake system malfunctions or repeated failures
• Steering problems that create safety hazards
• Electrical system failures affecting critical vehicle functions
• Air conditioning or heating system failures
• Persistent water leaks causing interior damage
• Safety system malfunctions (airbags, ABS, stability control)
• Excessive oil consumption requiring frequent attention

Minor cosmetic defects, isolated rattles, or problems that do not affect how you use the vehicle or its resale value typically do not qualify.

Extension of Time Periods

The warranty term and out-of-service period may be extended by any period during which repair services were unavailable to the consumer because of conditions beyond the consumer's control, such as natural disasters, strikes, or war.

Consumer Remedies: Refund or Replacement

When a vehicle qualifies as a lemon under the Act, the statute directs the manufacturer to either replace the vehicle or accept its return and issue a refund. Under Section 57-16A-3(B), "the manufacturer shall replace the motor vehicle with a comparable motor vehicle or accept return of the vehicle from the consumer and refund to the consumer the full purchase price." This means the manufacturer selects which remedy to offer; New Mexico does not give the consumer an explicit right to demand one remedy over the other. However, a replacement vehicle must be "comparable" and "acceptable to the consumer," so in practice a consumer who rejects an unsatisfactory replacement may push the manufacturer toward a refund.

Option 1: Replacement Vehicle

The manufacturer provides a comparable new motor vehicle. The replacement should be of the same make and model with similar equipment, options, and accessories. If the consumer does not accept the replacement as comparable, the manufacturer must work with the consumer to find an acceptable substitute.

Option 2: Full Refund (Vehicle Buyback)

The manufacturer accepts the return of the vehicle and refunds the consumer the full purchase price, including all "collateral charges." Under Section 57-16A-2, collateral charges are defined as additional charges not directly attributed to the manufacturer's suggested retail price, including:

• All applicable taxes
• License fees
• Title and registration fees
• Other governmental charges related to the purchase

The refund is the full purchase price plus 'collateral charges' as statutorily defined above, less a reasonable use allowance; the statute does not separately list towing costs, rental car expenses, or other incidental damages as refund components.

The Usage Deduction

Under both the refund and replacement options, the manufacturer may subtract a reasonable allowance for the consumer's use of the vehicle. Under Section 57-16A-3(B), this use allowance covers only the period before the consumer first reported the nonconformity and any subsequent time when the vehicle was not out of service for repairs.

The statute does not specify a numeric formula, but a common industry calculation is:

Usage Deduction = (Purchase Price x Miles Before First Repair Report) / 120,000

For example, if you paid $40,000 and drove 5,000 miles before reporting the defect, the deduction would be approximately $1,667.

Refund Distribution

When there is an outstanding loan on the vehicle, the manufacturer pays the lender the remaining loan balance and refunds any excess to the consumer. Refunds are distributed to the consumer and any lienholder according to their respective interests.

UCC Remedy Limitation

Under Section 57-16A-5, a consumer who seeks enforcement under the Motor Vehicle Quality Assurance Act cannot also pursue Uniform Commercial Code remedies found in Sections 55-2-602 through 55-2-608 NMSA 1978. You must choose between lemon law remedies and UCC remedies.

Federal Backstop: Magnuson-Moss Warranty Act

New Mexico's state lemon law works alongside the federal Magnuson-Moss Warranty Act (15 U.S.C. 2301 et seq.), which governs written warranties on consumer products nationwide. If a manufacturer fails to honor its written warranty on a vehicle, you may have a claim under Magnuson-Moss even if you do not meet New Mexico's specific lemon law thresholds. A successful Magnuson-Moss claim allows recovery of attorney fees, making it easier to find counsel. In practice, attorneys handling New Mexico lemon law cases typically plead both state and federal claims together.

Dispute Resolution Procedures

New Mexico's lemon law establishes a framework for resolving disputes without going directly to court.

Manufacturer's Informal Dispute Settlement Program

If the manufacturer maintains an informal dispute settlement procedure that complies with Federal Trade Commission regulations (16 CFR Part 703), consumers may be required to submit their claim to that program before pursuing refund or replacement remedies. For the program to be valid, it must:

• Meet all requirements under 16 CFR Part 703
• Be reasonably accessible to consumers
• Deliver decisions within the timeframes set by federal regulations
• Not force the consumer to waive any statutory rights

Certified Third-Party Arbitration

New Mexico may certify independent arbitration programs that meet specific standards. These programs offer a faster, lower-cost alternative to litigation. BBB AUTO LINE is one commonly available program for certain manufacturers.

Court Action

If no qualifying dispute settlement program exists, or if the consumer is dissatisfied with the outcome, the consumer can file a lawsuit. Consumers who win their lemon law case in court are entitled to recover reasonable attorney fees and court costs from the manufacturer (Section 57-16A-9). This fee-shifting provision makes it easier for consumers to find attorneys willing to take lemon law cases on a contingency or fee-recovery basis.

Manufacturer Defenses

Manufacturers may raise several affirmative defenses under Section 57-16A-4 to avoid liability.

Valid Affirmative Defenses

The burden of proving any affirmative defense falls on the manufacturer. Consumers should keep detailed documentation to counter these claims.

Dealer vs. Manufacturer Liability

New Mexico's lemon law places primary responsibility on the manufacturer, not the dealer. However, dealers must provide repair services and documentation. Dealers who engage in deceptive conduct may face separate liability under the New Mexico Unfair Practices Act (Sections 57-12-1 through 57-12-26 NMSA 1978).

Used Vehicle Protections (Section 57-16A-3.1)

New Mexico provides a separate layer of protection for used car buyers. Under Section 57-16A-3.1, a used motor vehicle dealer cannot exclude, modify, or disclaim the implied warranty of merchantability for a limited period after sale.

Duration of Used Car Warranty

The implied warranty of merchantability lasts until midnight of the fifteenth calendar day after delivery or until the vehicle has been driven 500 miles after delivery, whichever comes first.

What "Merchantability" Means

A used motor vehicle meets the implied warranty of merchantability if it functions substantially free of any defect that significantly limits its use for ordinary transportation on public highways.

Required Dealer Disclosure

The purchase agreement must include a conspicuous statement in boldface, 10-point or larger type, set off from the rest of the agreement:

"New Mexico law requires that this vehicle will be fit for the ordinary purposes for which the vehicle is used for fifteen days or five hundred miles after delivery, whichever is earlier, except with regard to particular defects disclosed on the first page of this agreement. You (the consumer) will have to pay up to twenty-five dollars ($25.00) for each of the first two repairs if the warranty is violated."

If the agreement lacks this disclosure, the entire purchase agreement is voidable at the consumer's option.

Consumer Repair Cost Sharing

If the used vehicle does not meet the implied warranty, the seller must have a reasonable opportunity to repair it. The consumer pays one-half the cost of the first two repairs needed to bring the vehicle into compliance, up to $25 per repair.

Consequence of Warranty Violations

Any attempt to exclude, modify, or disclaim the implied warranty in violation of this section makes the purchase agreement voidable at the buyer's option. This gives the consumer the potential right to unwind the entire transaction.

Title Branding and Disclosure

The Motor Vehicle Quality Assurance Act's definitions section does not itself set out title-branding or resale-disclosure procedures for lemon law buybacks. If you are buying a used vehicle in New Mexico, check the vehicle history report and ask the seller directly whether it was ever returned to a manufacturer as a lemon, and contact the New Mexico Motor Vehicle Division for current guidance on any separate title or disclosure rules that may apply.

Electric Vehicle Considerations

Electric vehicles (EVs) sold in New Mexico with manufacturer warranties are covered under the Motor Vehicle Quality Assurance Act. As EV adoption grows in the state, understanding how the lemon law applies to these vehicles is increasingly relevant.

Common EV Defects That May Qualify

• Battery degradation significantly beyond normal parameters
• Charging system failures (onboard charger, charging port)
• Range substantially below manufacturer specifications
• Electric motor or drivetrain malfunctions
• Thermal management system failures affecting battery performance
• Software defects affecting vehicle operation or safety
• Regenerative braking system problems

EV-Specific Challenges

• Software updates: Manufacturers may argue that over-the-air updates resolved the issue, potentially resetting the repair attempt count
• Battery warranty: Separate battery warranties (often 8 years/100,000 miles) may complicate coverage analysis
• Limited service options: Fewer New Mexico dealers may have EV-certified technicians
• Documentation: Electrical and software defects may require specialized diagnostic records

Statute of Limitations

Timing is critical when filing a New Mexico lemon law claim.

Key Deadlines

The 18-month and 90-day deadlines work on a "whichever is later" basis. If you go through a dispute settlement program and receive a decision after the 18-month window has passed, you still have 90 days from that decision to file suit.

How to Protect Your Rights

• Report every defect in writing during the warranty period
• Keep copies of all repair orders, invoices, and communications
• Track the number of days your vehicle spends at the dealer for repairs
• Follow manufacturer notice procedures exactly
• Use the manufacturer's dispute settlement program if required before going to court
• Consult a consumer protection attorney if informal resolution fails

Filing a Lemon Law Complaint

If you believe your vehicle qualifies as a lemon, follow these steps:

1. Document everything. Keep every repair order, invoice, and written communication. Record dates the vehicle was dropped off and picked up.
2. Send written notice to the manufacturer. Mail a detailed letter via certified mail describing the defect, listing all repair attempts, and requesting a refund or replacement.
3. Use the manufacturer's dispute settlement program if one exists and complies with FTC regulations.
4. Contact the New Mexico Attorney General's Consumer Protection Division if you need guidance. You can reach them at 1-844-255-9210 or file a complaint online at nmag.gov.
5. Consult an attorney. If informal efforts fail, a consumer protection attorney experienced with New Mexico lemon law can evaluate your case. Remember that prevailing consumers recover attorney fees under the Act.

More New Mexico Laws

• New Mexico Car Accident Laws