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Bankruptcy? What happens to my car warranty then?

steverstever Posts: 52,683
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?


  • steverstever Posts: 52,683
    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 Manahawkin, NJPosts: 10,330
    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.
    2013 Mazda 5 Grand Touring, 2010 Toyota Prius IV. 2007 Toyota Camry XLE, 2004 Toyota Camry LE, 1999 Mazda Miata
  • steverstever Posts: 52,683
    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 Manahawkin, NJPosts: 10,330
    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.
    2013 Mazda 5 Grand Touring, 2010 Toyota Prius IV. 2007 Toyota Camry XLE, 2004 Toyota Camry LE, 1999 Mazda Miata
  • steverstever Posts: 52,683
    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 Manahawkin, NJPosts: 10,330
    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.
    2013 Mazda 5 Grand Touring, 2010 Toyota Prius IV. 2007 Toyota Camry XLE, 2004 Toyota Camry LE, 1999 Mazda Miata
  • euphoniumeuphonium Great Northwest, West of the Cascades.Posts: 3,425
    the stockholders lose. So, why should the warranty continue and be valid?
  • nortsr1nortsr1 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 Great Northwest, West of the Cascades.Posts: 3,425
    CR may have improved, but I gave up on them when they advised "buy the Nash Rambler". :D
  • steverstever Posts: 52,683
    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 Central CTPosts: 11,917
    the current owner has decided to not honor the warranties on any sold or unsold saleen vehicles.
    2017 Ford Fusion SE 2014 Ford F-150 FX4
  • saablcpsaablcp 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 San DiegoPosts: 31,131
    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 Loudon NHPosts: 18,727
    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.

    2000 BMW 528i, 2001 BMW 330CiC

  • explorerx4explorerx4 Central CTPosts: 11,917
    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.
    2017 Ford Fusion SE 2014 Ford F-150 FX4
  • ronvprronvpr 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
  • 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 Manahawkin, NJPosts: 10,330
    It's not my first Odyssey and I haven't used the warranty yet.
    2013 Mazda 5 Grand Touring, 2010 Toyota Prius IV. 2007 Toyota Camry XLE, 2004 Toyota Camry LE, 1999 Mazda Miata
  • steverstever Posts: 52,683
    Some people like to troll the boards continually knocking certain brands. Has nothing to do with the topic either.
  • explorerx4explorerx4 Central CTPosts: 11,917
    that post seemed to be very familiar.
    2017 Ford Fusion SE 2014 Ford F-150 FX4
  • steverstever Posts: 52,683
    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 Manahawkin, NJPosts: 10,330

    Wow. What a concept. :P
    2013 Mazda 5 Grand Touring, 2010 Toyota Prius IV. 2007 Toyota Camry XLE, 2004 Toyota Camry LE, 1999 Mazda Miata
  • steverstever Posts: 52,683
    Yeah, it's just about a bankrupt idea eh? :shades:
  • 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.
  • Karen_SKaren_S Posts: 5,095

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  • 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 United StatesPosts: 5,620
    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.
  • 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 Posts: 24
    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 Manahawkin, NJPosts: 10,330
    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.
    2013 Mazda 5 Grand Touring, 2010 Toyota Prius IV. 2007 Toyota Camry XLE, 2004 Toyota Camry LE, 1999 Mazda Miata
This discussion has been closed.