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A lemon is a defective car that, when purchased new or used, is found by the purchaser to have numerous or severe defects not readily apparent before the purchase. Any vehicle with these issues can be termed a 'lemon,' and, by extension, any product which has major flaws that render it unfit for its purpose can be described as a 'lemon.'

Economist George Akerlof examined the market of lemons in his notable paper: "The Market for Lemons: Quality Uncertainty and the Market Mechanism", published in Quarterly Journal of Economics in 1970, in which he identified the severe lemon problems that may afflict markets characterized by asymmetrical information. He eventually received a Nobel Prize for the broad applications of the theory in this paper.

New vehicles may contain hidden mechanical flaws or defects in workmanship, caused by design flaws or by an error during the automotive factory build process. These errors can range from parts being installed incorrectly to a tool that was used to build the car not being removed or a batch of materials with structural or chemical flaws.

Consumer protection legislation typically labels vehicles as "lemons" if the same problem recurs despite multiple repair attempts (such as three times in a row over a short period, where previous attempts have not fixed the problem) or where defects have caused a new vehicle to be out of service for a prolonged period (typically thirty days or longer) for repairs.

The primary objective of these lemon laws is to force manufacturers to buy back defective vehicles or exchange them. Depending on the jurisdiction, a process similar to vehicle title branding may also be used to warn subsequent purchasers of the history of a problem vehicle. This portion of a vehicle's history is, however, often not retained with the vehicle title when exporting vehicles to another jurisdiction.

It has been suggested that Katrina car be merged into this article or section. (Discuss)

While used cars may be plagued with the same problems that beset new vehicles, used vehicles may also have been abused, improperly maintained or poorly repaired, been unprofessionally rebuilt after a collision or tampered with in some manner to conceal high mileage, mechanical defects, corrosion or other damage.

One form of lemon is called a "cut and shut", a form of body collision repair based on buying a wrecked car and sawing off the wrecked section to replace it with a matching section from another (similar) car. These vehicles may be inherently dangerous because at high speeds, or in an accident, the car may come apart.

If half of a car is a different colour than the rest of the car, the vehicle may be a "cut and shut" or may have undergone haphazard body repair in the aftermath of a serious collision.

Improperly repaired collision-damage vehicles also carry the risk of unibody problems. Unlike heavy trucks and lorries, most passenger cars manufactured since 1967 employ unibody construction instead of a separate body and frame. This saves weight, but the unibody is prone to bend (it is designed to do so in an impact, to absorb part of the energy of the shock) or suffer damage in severe collisions, causing the vehicle not to handle correctly or causing other mechanical parts to wear prematurely if the damaged unibody vehicle is driven after an accident.

Today, websites like Carfax can help a prospective used car buyer by providing a "history report" based on the vehicle's serial number (VIN). These reports will indicate items of public record, such as vehicle title branding, lemon law buybacks and recalls, but will not indicate minor/moderate collision damage or improper vehicle maintenance. An attempt to identify vehicles which have been previously owned by hire car rental agencies, police and emergency services or taxi fleets is also made.

A flood of hurricane-damaged used cars had also been reported in the wake of Hurricane Katrina and Rita in 2005. In many cases, such vehicles have sustained irreparable levels of salt-water corrosion.

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