By Patrick Olsen on February 17, 2009
Here's the scenario: The deals on domestics were great in January, so you picked up a shiny new Saturn. Or a Hummer. Now you're feeling a little nervous: What about my warranty? What's going to happen to the resale value of the car? Can I get parts? Here are some answers.
Q. I just bought a new Saturn/Hummer/Pontiac and I hear they may kill off the brand. What happens to my warranty?
A. Your warranty is a contract between the automaker and you. Even if the nameplate goes away, GM (or whichever automaker it is) is still on the hook for upholding the terms of that warranty. Now, if the automaker files for bankruptcy, it could be a different game. In that case, you might have to get in line with all the other creditors (bondholders, suppliers, etc.) to get your warranty paid off. Or, the bankruptcy court could make provisions to set aside enough money to pay any warranty claims. But for now, your warranty should remain valid.
Q. Will owning a discontinued brand hurt how much I can get when I try to sell it down the road?
A. Possibly, and maybe even probably. Used-car shoppers would likely be leery of a car from a discontinued brand, fearful that getting parts would be difficult and that there would be no dealer support for maintenance issues. That being said, GM cars often share platforms, so many of the Saturns and Pontiacs that might go away would have siblings that use similar, if not the same, parts. For late-model cars it wouldn't be a problem, but for older cars it would definitely give pause.
Q. When will I know what's going to happen to my automaker?
A. The Obama administration has a March 31 deadline to decide if the GM and Chrysler overhaul plans are viable. If it doesn't think they are, it has the authority to call back the money that's already been lent to the two automakers. Chrysler, for one, has said that would lead to a bankruptcy filing, which could lead to liquidation, according to the plan it filed yesterday. It's too early to tell how the Obama team will decide on these two plans.
Q. Is it a good time to buy a car from one of these on-the-bubble brands?
A. It could be, if you have one in mind that meets your needs and you can get financing or, better yet, pay cash. Cars are generally more reliable than they've ever been, and there's enough inventory out there right now that you can get some really good value for your money. Of course, there could be risks, but if you plan to keep your car for a long while (which means the depreciation issue is less of a concern for you), then there might not be a better time to act.
Editor-in-Chief Patrick Olsen was born and raised in California. He loves pickup trucks and drivers who pay attention. Email Patrick