Government to Guarantee GM & Chrysler Warranties
A Consumer Reports survey found that more than three-quarters (78 percent) of respondents said they were unlikely to consider buying a new car from an automaker in bankruptcy; 64 percent were very unlikely. Further, more than eight in 10 respondents said they are unlikely to consider buying a new car from a division that is being sold or phased out; 63 percent said very unlikely.
To counter this problem, President Obama announced this morning that the federal government will back their car warranties, in an effort to bolster consumer confidence.
The program will involve a separate account that will be funded with cash contributed by the manufacturer and a loan from the U.S. government to pay for repairs covered by the manufacturer’s warranty on each new vehicle. More details on the announcement are available in a NY Times article by Chris Jensen.
