What Happens to Your Car Warranty if GM or Chrysler Goes Bankrupt

Yesterday, the Obama administration issued an ultimatum to GM and Chrysler, asking Detroit’s troubled auto makers to restructure immediately or they will face other options including bankruptcy. Unlike last December when the Bush administration gave GM and Chrysler $17.4 bailout to keep them operating, this time the government decided to take a hard line on both car makers after a review showed that on reform the government demanded was made since receiving the first funding more three months ago. As part of the government’s plan, GM CEO Rick Wagoner was asked to resign from the post over the week. In addition, the Treasury Department also sets an array of conditions before handing out another check, including negotiating further cuts from the UAW, reducing its unsecured debt, and coming up with a plan that works.

If again no progress on restructuring is made after 60 days, GM could end up a bankruptcy court, which could deal a severe blow to the U.S. auto industry and millions of workers employed by the auto makers as well as suppliers. On the other hand, if you are customer of GM or Chrysler who recently purchased a vehicle from either manufacture, then you may wonder what will happen to your car that’s still under warranty if one or both of them goes under. While the government is reluctant to help GM and Chrysler this time, they want to make sure consumers are protected with Warranty Commitment Program announced yesterday by the president.

Under the program, the U.S. government will work together with GM and Chrysler to establish a fund to cover costs of warranty repairs of cars made by either GM or Chrysler if either files for bankruptcy protection later:

If you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired, just like always. Your warranty will be safe. In fact, it will be safer than it’s ever been, because starting today, the United States government will stand behind your warranty.

At least, that’s one thing you don’t have to worry about.

*Photo from automopedia.org

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8 Responses to “What Happens to Your Car Warranty if GM or Chrysler Goes Bankrupt”

  1. tom |  Apr 01, 2009 at 10:46 am

    I don’t know if the idea of having the government back up your warranty is such a great idea.

    I mean, how are they getting the money for this? Is there any restrictions?

  2. Allen |  Apr 15, 2009 at 1:39 am

    Whoever wrote this statement is a dumbass…….Having the government back up my warranty makes me worry even more than I did before. Thanks jerk off.

    “If you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired, just like always. Your warranty will be safe. In fact, it will be safer than it’s ever been, because starting today, the United States government will stand behind your warranty.”

  3. fathersez |  Apr 15, 2009 at 11:50 pm

    I am not sure if the Government would be prepared for what I am sure a wave of frauds that should arise to milk this loophole.

  4. Mitch |  Apr 16, 2009 at 3:00 am

    I agree with Allen, this guy is an idiot.

  5. Sun |  May 07, 2009 at 10:38 pm

    Chrysler filed for Ch. 11. GM just burn through $10B in the first quarter. Bankruptcy will be the only way to get these automakers restructured.