ACT law requires a licensed used-car dealer to offer a warranty of three months or 5000km warranty on used passenger vehicles which are less than 10 years old or have travelled less than 160,000km. So regardless of the mileage your car has covered, it’s already 12 years old if you bought it last year. Unfortunately, that really means you’re not covered and the car-yard you bought it from has – on the surface – no legal obligation to compensate you whatsoever.

Australian Consumer Law can over-ride state and territory warranty laws, but this might only apply if you could prove that the vehicle was of unmerchantable quality, not fit for purpose or had existing faults that weren’t disclosed to you at the time of purchase. None of this would be easy to prove after eight months of ownership. You could elect to have the car independently inspected to determine the cause of the failure, but even this may not be conclusive. You’d also need to be able to prove that you maintained and serviced the car correctly for the time you’ve owned it. The first step would be to contact the car-yard and ask for help on a goodwill basis. I wouldn’t be holding my breath, however.

You've done the right thing by contacting VW as they're the people who can help you. You're right, airbags should last the life of the car so to have to replace one is unusual. Ask the dealer to explain what is wrong with the airbag and why is needs to be replaced. If there is no satisfactory response from the dealer then press VW for some help towards the cost of replacing it.