U.S. Government Will Back New Car Warranties Despite Possible Bankruptcies
(A big inducement to buying new is the peace of mind of getting a bumper-to-bumper warranty.)
You would like to buy an American car but would the warranty still be honored if the automaker goes bankrupt? And what about the availability of parts and service?
In a move to build confidence in American vehicles, and spark sales of domestic vehicles again, the Obama administration has announced that warranties on new cars purchased during this restructuring process will be honored, even if the manufacturer goes out of business. This removes at least one big reason American buyers have been shying away from vehicles by the Big Three automakers.
The warranty announcement came along with news that GM Chairman and CEO Rick Wagoner was being forced out. Read the details of Wagoner's departure in AutoObserver.
For details about the warranty announcement read on.
Details of the warranty plan were announced by the U.S. Treasury Department which will be overseeing the plan, should it be needed.
The program is aimed at consumers considering the purchase of a new American car to assure them that their warranties will be honored. It is "part of the Administration's broader program to stabilize the auto industry and stand behind a restructuring effort that will result in stronger, more competitive and viable American car companies," the Treasury announcement said.
The U.S. Government intends to back the new car warranties by creating a separate account funded with cash from the manufacturers and the government. The program will be run by a third party program administrator with the backing of financial resources allocated from the Treasury Department's Troubled Asset Relief Program (TARP).
In the event of a failure of one of the automakers, the Treasury Department would appoint a program administrator to "identify an auto service provider to supply warranty services."
The so-called Warranty Commitment Program is intended to "encourage the continued viability and restructuring of the auto industry by mitigating consumer uncertainty that is depressing demand for new vehicles."
The press release stressed that buyers don't have to do anything in order to receive the warranty -- it is automatic with the purchase of a new car. The warranty guarantee applies to any domestic auto manufacturer even though, so far, Ford Motor Company has not received government assistance.
"The U.S. Treasury will work with the auto companies to back-stop your warrantee," the press release said, "and will commit to honoring that warrantee in the event that the manufacturer cannot."
- Posted by
- Philip Reed March 30, 2009, 8:04 AM
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- Categories:
- Car Loans and Financing, Car Maintenance
- Technorati Tags:
- car buying, Chrysler, consumers, GM, New car warranties, Obama administration, Warranties
wow this is totally US Motors now.
I hope US Motors builds some sweet rides in the future, now that it's federalized.
I want some cool theme cars based on American eagles and flags. And State animals and flowers! Ooooh...
the US warranty on cars is pathetic, how can you cover something if they don't make the parts. Current wait time on a Chrysler transmission is over 35 days!!!!
So when your tranny goes out, and they do so frequently and often in Chrysler vehicles, you'll be without a car for over a month.
That's no warranty at all!