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Bankruptcy? What happens to my car warranty then?

steverstever Guest Posts: 52,454
If the manufacturer of your new car goes bankrupt, what will happen to your factory warranty?

Or if you have an extended warranty that's backed by the manufacturer, will that warranty still be honored?

Extended warranties from third party companies should still continue to be backed by those companies, but if the dealer network is no longer affiliated with a manufacturer, will the third party extended warranty company reimburse your repairs?

Lots of questions - who has answers?
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Comments

  • steverstever Guest Posts: 52,454
    There's a general Extended Warranties discussion that may be helpful if you are thinking of buying coverage to protect you in case one of the automakers files bankruptcy.

    The Jeep Cherokee owners have kicked this potential problem around a bit in the What will happen to my Chrysler warranty? discussion. And there's Chrysler's New Lifetime Drivetrain Warranty that I guess is at risk of going away or being changed.
  • fezofezo Member Posts: 10,384
    This is an interesting question.

    Not long ago if I were buying a BIg 3 car and getting an extended warranty I'd have been looking for one from the manufacturer rather than a third party. Now it might be exactly the opposite.
    2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
  • steverstever Guest Posts: 52,454
    This is an interesting question.

    Someone wrote into our Help Desk asking about this, and it sounded like a good topic. One rather hopes it's all hypothetical. Maybe a Daewoo owner can pop in.

    It is funny how things flip 180 degrees sometimes eh? I've always poo-pooed third party warranties (and I sure wish the FTC would jail those idiots who call me once a week to my number that's on the do not call list trying to sell me one).
  • fezofezo Member Posts: 10,384
    What's up with that? I never used to have people trying to direvt market warranties to me. Now they are all over the place.

    Of course I'm not exactly the guy they want. We've got four cars. The only one under 110K is the CPO Ody which has loads of warranty left.
    2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
  • steverstever Guest Posts: 52,454
    Don't worry - drag them through the drill and they'll be happy to write up your ten year old vehicle with 130,000 miles on it for another 7 years or so. When I'm bored, I let them do exactly that on my old Quest. Then I put them on hold while I go upstairs to "find my credit card." :blush:
  • fezofezo Member Posts: 10,384
    Good plan.

    Ask the next one for a quote on the Daewoo that somehow escaped their notice... That could answer your question about them!

    There's someone around her that has a Daewoo still. I see it maybe once every two weeks.
    2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
  • euphoniumeuphonium Member Posts: 3,425
    the stockholders lose. So, why should the warranty continue and be valid?
  • nortsr1nortsr1 Member Posts: 1,060
    There is a full explanation of the above question in this months (April 09) edition of Consumers Reort. (page 5). If they go Chapter 11 , they will still be open for business (sales and service). It is very informative and I suggest you read same (if you get the consumer's reportr mag).
  • euphoniumeuphonium Member Posts: 3,425
    CR may have improved, but I gave up on them when they advised "buy the Nash Rambler". :D
  • steverstever Guest Posts: 52,454
    At some point a company has to come out of Ch. 11 or convert to a liquidating Ch. 7.

    And it's possible, although not likely, that an approved plan of reorganization could change the warranty obligations.

    For example, as part of their Ch. 11 plan, Chrysler could convert the lifetime drivetrain warranties to a 3/36 warranty. With court approval of course.

    I can read CR online free through my library and will have to go take a look. Thanks for the heads up. (CR sold me down the river on a Gruman canoe instead of the much better ABS material back in '74 and I've never forgiven them either :shades: ).
  • explorerx4explorerx4 Member Posts: 19,204
    the current owner has decided to not honor the warranties on any sold or unsold saleen vehicles.
    discussion
    2023 Ford Explorer ST, 91 Mustang GT vert
  • saablcpsaablcp Member Posts: 195
    I certainly would not equate the actions of a company the size of Saleen Motors with any future actions a company the size of a General Motors may take.Thats like comparing the corner video rental store with Blockbuster.
  • gagricegagrice Member Posts: 31,450
    How long before Tesla goes the way of Saleen? One of my 6000 Lithium cells is dead what do I do?

    It’s nowhere near as beleaguered as car companies in Detroit, but the ambitious privately-held electric roadster company, Tesla, has put plans for a San Jose-based factory on hold. The company, which has asked for a $400 million low-interest government loan, hasn’t been able to raise a necessary $100 million in venture capital to go through with the plans. Part of the issue could be politics: Silicon Valley wants its sexy automaker to stay local, but the government would require Tesla to take over a defunct factory elsewhere.
  • andys120andys120 Member Posts: 23,363
    You have to be a cross between a Philadelphia lawyer and a certified auto tech to be sure you have complete coverage on a third-party warranty. I was denied coverage for a failed VANOS control module ($1200 p&L) because it was not specified in the items covered under my "Platinum" warranty coverage.

    2001 BMW 330ci/E46, 2008 BMW 335i conv/E93

  • explorerx4explorerx4 Member Posts: 19,204
    when i was younger and more naive, i ended up with a 3rd party warranty when i thought i got quoted for one from the manufacturer.
    i ended up buying it.
    one time the car died and i had it towed the the local dealer although it had a clause in it that you had to be 40 miles or more away from the selling dealer to get coverage under the warranty.
    i guess the warranty company used the 'as the crow flies' method to determine the distance. in actual driving it was over 40 miles.
    i ended up paying 2 hours diagnosis at dealer 1 because they were '38' miles away as measured by the warranty company.
    i also had to pay for the tow back to the selling dealer.
    to the warranty companies credit, they did reimburse a good portion of the towing bill and to fix the actual problem, although they would not accept the original diagnosis, which was correct.
    2023 Ford Explorer ST, 91 Mustang GT vert
  • ronvprronvpr Member Posts: 24
    It's good you have lots of warranty left on your Honda Odyssey. My Odyssey has used its warranty many many times for transmissions rebuilds (2), oil leaks, sliding door motors, dash rattles. You get alot of use out of a Honda warranty. What you don't get is a reliable vehicle from Honda
  • nick_oconnellnick_oconnell Member Posts: 1
    hey, i'm changing the power steering pump in my car. it's a 1997 850 GLT Wagon, i've removed the pump and reservior from the engine with no problems but am having the hardest time figuring out how to disconnect the two without breaking anything. any sudgestions?
  • fezofezo Member Posts: 10,384
    It's not my first Odyssey and I haven't used the warranty yet.
    2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
  • steverstever Guest Posts: 52,454
    Some people like to troll the boards continually knocking certain brands. Has nothing to do with the topic either.
  • explorerx4explorerx4 Member Posts: 19,204
    that post seemed to be very familiar.
    2023 Ford Explorer ST, 91 Mustang GT vert
  • steverstever Guest Posts: 52,454
    The other ones we get are those that think any post that's at all negative about the brand that love is a troll post.

    It works better if people just talk about the topic.
  • fezofezo Member Posts: 10,384
    Topic?

    Wow. What a concept. :P
    2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
  • steverstever Guest Posts: 52,454
    Yeah, it's just about a bankrupt idea eh? :shades:
  • dbostondriverdbostondriver Member Posts: 559
    Even if the car company goes bankrupt, there is still money in servicing those cars. Part of the bankruptcy agreement will entail servicing the warranties.
    Just expect bad service by a third party company. But hey, if you bought a GM your probably expecting to spend time at the service station anyway.
  • allicat1214allicat1214 Member Posts: 1
    Hello,

    I read the news articles about the federal govt. honoring GM and Chrysler warranties.

    "The program will cover consumers who buy a new GM or Chrysler vehicle during the restructuring period, according to a U.S. Treasury Department statement."

    What if you already own a GM car with an extended warranty and they declare bankrupcy??

    My son is going to college in the fall. We bought him a 2007 Malibu Maxx with all the extra safety features curtain & side airbags, etc. We also bought the extended warranty to cover him while he was away from home in college.

    But what happens if GM goes bankrupt??? The current proposal by Obama's administration only covers cars purchased during an upcoming transition period.

    We're still making payments on the car, including the cost of the warranty. I feel sick.

    Thanks for any info anyone can share.

    A concerned mom
  • corvettecorvette Member Posts: 10,229
    There is currently no definitive answer for what may happen with the 3/36 and 5/100 factory warranty.

    I believe the GM factory extended warranty is underwritten by GMAC, which is a separate entity than GM. GMAC has been described as "cash-strapped," but isn't in such dire straits as GM itself.

    If it makes you feel better, you can cancel the GMAC warranty and get a prorated refund. If you financed the warranty, I think the payoff goes to the lender, but this will reduce the principal balance of your loan.
  • stoneybrokestoneybroke Member Posts: 83
    I think I'd worry a lot more about resale value if these guys go belly up. Priced any oldsmobiles lately? I really wanted to pull the trigger on a CST AWD, but.........
  • wp746911wp746911 Member Posts: 26
    So IS the federal govt covering the warranty, or are they just saying they WILL/MIGHT? Is the warranty protection in place already or is it something pending blah blah legislation? I'm looking to buy a town and country but need some warranty assurance.
  • fezofezo Member Posts: 10,384
    I wouldn't count on that assurance. The plan is to offload the warranties on a third party company and details are not anything like solid. If you are thinking they'll just back the lifetime warranty that Chrysler advertises I would not count on it.
    2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
  • wreckerman9wreckerman9 Member Posts: 8
    thats what the news reported,maybe i can get my congressman to replace my fuel pump.or diagnose my check engine light,ehh? i wouldn't worry myself about it,life's 2 short,ya know...and there's always gonna be another problem to take your mind off of this one. drive careful crew.
  • whoosierdaddywhoosierdaddy Member Posts: 76
    Henderson confirmed the last Saturn vehicle will be built this year unless a buyer for the brand emerges with a good offer. GM will phase out Saturn by the end of this year.
  • cadillacmikecadillacmike Member Posts: 543
    Gee, not too many relevant posts here.

    I'm concerned about my wife's car which still has a supposed "factory warranty" through next summer (if she doesn't hit the mileage limit first). It's a CTS, which has been pretty trouble free. But as for buying a new car - not right now, no way, I like American cars but not Fords or Chryslers (Cadillacs for me thank you), and there's no way I'm getting sucked into this malestrom. I think I'll find a nice 1995-96 Fleetwood to replace the one i crashed before getting sent overseas. They'll be relatively inexpensive, can last forever and I LIKE them.
  • Mr_ShiftrightMr_Shiftright Member Posts: 64,481
    Unless I'm missing something obvious that goes against all previous history--when a car company goes Ch 7, it liquidates, and all owners are SOL when it comes to warranty. That's it.

    Not to scare anybody, but if my history is correct, no American car company has survived bankruptcy since Studebaker in 1934--which hung on another 32 years, probably thanks to WW II.
  • dtownfbdtownfb Member Posts: 2,918
    As long as GM remains in Chap. 11, owners shouldn't see anything different. Chrysler is about to emerge from bankruptcy any day now. How long the new company last is another story.
  • gagricegagrice Member Posts: 31,450
    If you buy a new vehicle from one of the dealers that has lost his franchise. Do you think the company will warranty it? The Chrysler dealer in Florida with 125 new cars claimed he could not sell them as new after June 9th when his franchise is pulled. I would think those cars are near worthless. How the resale can do anything but go in the toilet is beyond me. If Toyota is selling new Tundra PU trucks at 2/3rds MSRP, what would a Dodge PU truck be worth. Maybe half new price.
  • dtownfbdtownfb Member Posts: 2,918
    It shouldn't matter if he can sell them new or not. As long as Chrysler is in business, they have to honor the warranty. The 3yr/36k mile warranty is in affect new or used. Now the Chrysler Lifetime Powertrain Warranty may be a different story. I'm not familiar with details of the warranty but I would hope that Chrysler would honor the Lifetime powertrain warranty since the cars have never been titled.

    I think all Chrysler's are worthless but i agree that all used Chrysler's will take a huge hit in the resale value on June 9th esp. 1-3 year old cars. similar to what happened with Oldsmobile. You can probably buy a new Chrysler for cheaper than a 1-3 used one.

    Interesting times. I'm about to get into the maket for a new/used car. should be fun.
  • volvomaxvolvomax Member Posts: 5,238
    If the dealer sells the car AFTER his franchise is pulled, Chrysler DOES NOT have to honor any warranty.
  • dtownfbdtownfb Member Posts: 2,918

    If the dealer sells the car AFTER his franchise is pulled, Chrysler DOES NOT have to honor any warranty.


    Why wouldn't the basic 3 yr/36k mile warranty not be honored? I understand the Limited Lifetime warranty wouldn't be honored.

    Is this because the cars would be considered used cars?
  • corvettecorvette Member Posts: 10,229
    I think the car has to be delivered (and the warranty activated) from an authorized dealer. If they don't have a franchise, it's basically a grey market car.
  • volvomaxvolvomax Member Posts: 5,238
    I think the car has to be delivered (and the warranty activated) from an authorized dealer. If they don't have a franchise, it's basically a grey market car.

    Bingo.
  • gagricegagrice Member Posts: 31,450
    Electronics and Cameras have the same issue. Grey market is many times cheaper, as long as the device keeps working. I look for a lot of grey market vehicles over the next couple years. Buyer beware.
  • mitzijmitzij Member Posts: 613
    You may be confusing grey market (new car sold outside of the franchise agreement) and aftermarket (electronics/accessories for a vehicle sold by a company that didn't manufacture the car)

    Aftermarket parts can have a warranty through the aftermarket company. Aftermarket parts can void the manufacturer warranty if they cause trouble, but it's an unusual occurrence.

    Grey market vehicles usually have the warranty blocked or severely limited. We occasionally see a vehicle built for Canadian sale that was brought south and sold as 'nearly new'. These were meant to be used in Canada-not the US, so the warranty is voided.
  • gagricegagrice Member Posts: 31,450
    I was not thinking about after market car stuff. I was referring to cameras & electronics sold online. Some have full MFG warranty others came in grey market and are not warranted.

    This will be a whole new situation. Most car dealers that just go out of business give back the cars or the bank takes them back and they are sold through other dealers. With several 1000 dealers losing their franchise no one will want the inventory and the customer could get screwed if they do not understand the difference between a legitimate dealer and one that is just selling cars he was stuck with. With Chrysler shut down the supply may dry up before the dealers lose their franchises.
  • fezofezo Member Posts: 10,384
    And if not you can talk to their special "no warranty for you on your new car" manager, U. B. Scrood.
    2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
  • explorerx4explorerx4 Member Posts: 19,204
    got the new Fiat 'partner' of Chrysler to honor the previously filed 'lemon law' cases.
    bankruptcy would have invalided these.
    good move on Fiat's part.
    2023 Ford Explorer ST, 91 Mustang GT vert
  • dtownfbdtownfb Member Posts: 2,918
    Interesting! I did not know that. Thanks
  • steverstever Guest Posts: 52,454
    That is interesting. Here's a short blurb about it:

    Fiat Agrees To Honor State's Lemon Law With Chrysler (courant.com).
  • steverstever Guest Posts: 52,454
    Now Public Citizen is weighing in:

    "Leading national consumer groups late Tuesday appealed the decision of the federal bankruptcy court overseeing the Chrysler bankruptcy proceeding, asking the court to preserve consumer protection laws and the rights of victims injured by vehicle design flaws and defects to seek compensation from Chrysler.

    With the stroke of a pen, the bankruptcy court exempted the new Chrysler/Fiat company that will emerge from bankruptcy proceedings from accountability to consumers who have suffered or will suffer injury or loss caused by defects."

    Ruling that Undermines Lemon Laws in 25 States Should Be Overturned
  • cadillacmikecadillacmike Member Posts: 543
    Steve, the court ruling only kills off existing vehicle liabilities, not new sales, right? Still a screw up on the part of the court. The STUPID military network here is BLOCKING my access to the site because it is an "advocacy group??? :mad: :mad: :mad:
This discussion has been closed.