REPORT: Government ends warranty programs for GM, Chrysler
On March 30, President Obama announced that the federal government would back the warranties of General Motors and Chrysler in the event of bankruptcy. When the president says the word "backing," he means cold, hard cash, and in this case the total was $641 million. But with both companies out of bankruptcy court and flush with the government cash needed to run their businesses, it is apparently time to pay the money back.
Automotive News is reporting that new Auto Task Force head Ron Bloom informed a House Judiciary subcommittee that the government would no longer be backing the warranties of GM and Chrysler, adding "consumers can now feel assured that the companies have the financial wherewithal to meet their warranty commitments on a continuing basis."
GM and Chrysler have reportedly returned the $641 million, with interest. GM told Automotive News that it didn't use any of the funds, while Chrysler declined to comment on warranty matters as a matter of company policy.
[Source: Automotive News - Sub. Req. | Image: Justin Sullivan/Getty]
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Reader Comments (Page 1 of 3)
Brian 6:05PM (7/22/2009)
Still feeling good about those GM and Chrysler purchases? I bet not.
I'm soooo glad I gave up on Detroit years ago.
BTW, GM will be back in Chapter 11 soon enough and Chrysler will take a dirt nap with Chapter 7. All in 2-3 years, at the most. Mark my words.
Reply
Chris O 6:22PM (7/22/2009)
I don't feel bad about my GM purchases at all (3 in the last year) - and why should I?
Did you even bother to read the article, or are you just trolling?
GM and Chrysler are supposedly able to handle their own waranty costs now, and apparently there was NEVER a time when GM actually needed to tap into any of those funds. Basically, during C11, my GM cars had the exact strength of warranty backing that my Nissan does... which is to say that the manufacturer covered any and all warranty repair costs. For GM, at least, the emergency net wasn't needed.
Ah, the joys of literacy.
You may have given up on Detroit, but Ford and GM are still battling (I'm not sure what Chrysler is doing). Plenty of people are still buying American cars, but you probably don't read sales numbers, either.
Rogue_G 6:32PM (7/22/2009)
Yes, he's a troll. Stop feeding him. Vote it down and move on.
tuxchown 6:59PM (7/22/2009)
"Chris O - Did you even bother to read the article, or are you just trolling?"
Actually, Brian is his middle name. Troll is his first name.
thedude3389 7:20PM (7/22/2009)
I dont completly agree with brian.. but i do agree on giving up on their cars. I bought a Cobalt LS 4 days ago and im not so impressed (but since im a teen and the resale was crap, i bought it.) Im not saying it doesnt drive well, because its nice to drive, its just the ergonomics... They feel so cheap. I would have never considered paying full pop for that car. Never.
Mr.Oak 7:42PM (7/22/2009)
the dude: Buyers' remorse eh? don't worry, it'll grow on you. You probably could have bought a better quality used car for the same money.
Yaroukh 8:49PM (7/22/2009)
just rate him down and move along
like we do it with Matt
Dave 9:57PM (7/22/2009)
To the dude:
You have to compare the Cobalt to cars that sell for the same price. After rebates and dealer markdowns, a Cobalt is far cheaper than a Corolla or Civic. Or even a Fit.
And I'd rather have one than a Yaris, Accent, Versa, etc....
Richard S. 11:34AM (7/23/2009)
The Cobalt interior feels so cheap. Perhaps Chevrolet should have been selling a Cobalt with the interior stripped, then allowed different companies to offer interior packages. Choose your own: Don't want to pay much? Get a cheap interior with vinyl seats. Wants to splurge a little more? Get one with soft-touch plastics, walnut wood-trim and Recaro seats.
GM mechanicals are fairly good, the interior workmanship, where people tend to interact more with the car is what has been a big turn-off.
I remember when I first moved to this country and compared the interior of a 1990 Pontiac Grand Prix to a 1990 Honda Accord. It was what the heck is inside this Pontiac (the window-buttons literally cracked within 6 months).
thedude3389 4:54PM (7/23/2009)
Mr Oak, I bought the car from an auction so i couldnt have gotton a better deal. I dont have buyers remorse, im just stating what i feel. The interior feels really cheap, thats it thats all.
Yaroukh, Its a forum not a place to be an annoyance. If you dont have anything better to post, just dont.
Dave, i never said i didnt like the car. Yeah, i agree, id rather have it over the yaris and the versa. (Cant say anything bad about the accent cause i actually like it....) But there is one thing to remember, you get what you pay for. An accent may be smaller, but Hyundai has come a long way and it actually drives and feels very good. Only reason im not in one is cause resale is still high at the auctions for the newer ones.
Randy 12:08PM (7/24/2009)
"and apparently there was NEVER a time when GM actually needed to tap into any of those funds"
Though I agree with most of your post, GM didn't tap into those funds because it went bankrupt. So the "funds" of the american tax payer are still being used.
inline6 6:10PM (7/22/2009)
Brian, you sorta suck at life on this one...or at least reading comprehension.
Now that GM and Chrysler are out from under BK, the government is no longer backing the warranties because,
"consumers can now feel assured that the companies have the financial wherewithal to meet their warranty commitments on a continuing basis."
Yup...got that from the same story you commented on.
It's also interesting to note that GM used NONE of the $641M, but paid it back WITH INTEREST. So those whining taxpayers complaining about money going to failing companies just made a PROFIT on this particular venture.
Just thought I'd set the record straight before the demagoguing became unbearable.
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Brian 6:21PM (7/22/2009)
The government isn't backing them because they know the companies are toast in the long term and getting out while they can. They're going to say "well, we TRIED" when they go through their second C11/first C7. This is plain for any thinking/objective person to see.
These aren't saved companies. As TTAC says, they're zombies, and Ford is going to join them.
Chris O 6:25PM (7/22/2009)
@Brian:
Wow. Just... wow.
Brian, the government isn't backing the warranties because the manufacturers are now completely able to handle it on their own.
I found a post that sadly may not be able to help you. Perhaps you can get an adult to read it to you:
http://en.wikipedia.org/wiki/Reading_comprehension
Oluseyi 6:27PM (7/22/2009)
@Brian: really, it doesn't matter why the government is no longer backing them. It doesn't matter whether the government thinks they are viable long term, because they are out of bankruptcy protection and are beginning to pay back their debts - they paid back the warranty fund with interest, making this a quick and savvy investment for the government.
Now to see if GM can return to profitability and buy out the government's shares, making it once again a fully private entity. If that happens, I think the internet will implode for a second as all the hotheads who decried the "socialism" deflate :-P
In any case, this is a sliver of good news. Here's hoping we get more, because we NEED it as an economy.
Brian 6:28PM (7/22/2009)
"Brian, the government isn't backing the warranties because the manufacturers are now completely able to handle it on their own."
Bwahaha! Sucker. It only appears they can. The government is backing out while they can, before the second round of bankruptcies (well, liquidation in Chrysler's case) hits. Watch.
Chris O 6:31PM (7/22/2009)
@Brian:
Please cite a source... ANY source.
Both companies have restructured debt, sales revenue streams, and cash on-hand.
Here's more material to have an adult read to you:
http://en.wikipedia.org/wiki/Accounting
Brian 6:42PM (7/22/2009)
Google "General Motors Zombie Watch" Chris_O. Meet the New GM: Same as the Old GM. Read the whole series. I'd link it but moderation ate the link.
Brian 6:43PM (7/22/2009)
Google "General Motors Zombie Watch" if you want some reading material, ChrisO.
Protzenegger 6:49PM (7/22/2009)
"Bwahaha! Sucker. It only appears they can."
You win this week's STFU Award.