GM Bankruptcy -- How Safe Is Your Factory GM Warranty?

As a GM bankruptcy begins to become a very real, near term possibility, I'm asked by many of my customers how this may potentially affect their factory GM warranty. Will their coverage be good tomorrow or will it be wiped out by the bankruptcy?

When I was first asked these questions, I would have to admit that I was a little tongued tied and unsure of an appropriate response. Now, having given it much thought and after doing some research, I have come to the conclusion that there are three key factors to consider regarding the future coverage of a customers GM warranty.

1) GM Would Never Recover

If GM were to hang hundreds, thousands and/or millions of consumers out to dry, by not honoring their new car warranty, then they would quite simply, Never Recover!

If that many consumers were to be "burned, " GM would have the near impossible task of rebuilding trust and credibility with millions of consumers. With the already floundering sales of GM products, a loss of even 20% of their loyal customer base would be financially crippling.

2) Politicians and The Egg On Their Face

Our beloved politicians in Washington and their "To Big To Fail" motto would not and could not let a GM bankruptcy negate the coverage provided by the factory GM warranty.

They have simply invested too much tax payers money into GM at this point and it would be a multi-billion dollar blunder that would, more than likely, cost them their prized re-election next term.

3) Treasury Departments Warranty Commitment Program

Source: WhiteHouse.gov 03/30/2009

For any new GM vehicles purchased during the GM bankruptcy and/or restructuring period all factory GM warranty coverages will be honored.

A reserve account will be established, and run by a third party program administrator, in which 125% of expected warranty service costs will be held. 15% of those funds will be provided by the manufacturer and 110% will be provided by the US Treasury.

In the event that GM were to go out of business, then the US Government would identify a qualified third party warranty service provider to assume responsibility for all of General Motors warranties covered by the program, in exchange for the assets of the program.

Summary

I'm not a betting man, okay maybe a little, but I'd be willing to bet that a GM bankruptcy will have absolutely no adverse affects on existing factory GM warranty coverage and/or any future sales of new GM cars, trucks and SUV's.

The GM new car warranty coverage is one of the best coverages available and if you are currently covered, or will be with a new purchase, then I think it's safe for you sleep well at night, because your coverage will be good tomorrow.