I find it weird though that it uses an example of autos, because of the hypothetical presence of asymmetric information, which doesn’t seem to describe the real world well at all.
The quality of cars has risen dramatically and steadily over the years. There are multiple mechanisms which compensate for the difficulties a lay person has valuing a complex product.
In addition to government regulations, brand reputation is hugely important in motivating automakers to make reliable products.
The subject is of keen interest to buyers, who actively seek out information about potential quality of a new car purchase. In the pre-internet area it was harder, but sources of information like Consumer Reports were well used.
Since brand perception is expensive to build, and easy to lose, my anecdotal perception is that automakers try really hard to make great products. Especially because if the sell someone a lemon, the customer will be stuck with it for some time, increasing the opportunity for various types of reputation harming communication.
In the used car market the forces that drive quality are passed right through. While there is perhaps a higher chance of being stuck with a lemon, there are plenty of countervailing forces.
In anycase it struck me as odd that the example the paper used to show the intuition behind it was one that my perspective is almost the opposite of.
I guess the general principle I’m alluding it is that in markets that have a high potential for asymmetric information problems, the problems are obvious, and potential buyers will actively use strategies to compensate.