Because buyers lack information about used cars for sale:

Question

Quizplus · Accepted Answer

The lack of information about used cars for sale leads to a market phenomenon known as "adverse selection," where buyers, unable to distinguish between high-quality (peaches) and low-quality (lemons) cars, will offer a price that reflects the average quality of cars in the market. This means sellers of well-functioning cars are less likely to get a fair price, discouraging them from selling their cars, and potentially leading to a market with a higher proportion of lemons.

Because Buyers Lack Information About Used Cars for Sale