what you should know before buying a car from a company that's in danger of bankruptcy

Posted by Rie Umano

Do you think it is a good idea to buy a new car from an automaker in bankruptcy? Due to the result of our current economic recession, auto manufacture industry is in danger of bankruptcy. For example GM and Chrysler are well-known major U.S. automobile manufacture companies that are in danger of bankruptcy. According to a survey by Consumer Reports, almost 80% of people said they weren’t likely to buy a new car from an automaker in bankruptcy. There are things you need to consider before buying a car from those companies.
First is the warranty issue. The risk of buying a new car from a company that is in danger of bankruptcy is that you would not get any warranties if the company goes into bankruptcy. There is a program, called Warranty Commitment Program, backed by the federal government. If you buy a GM or Chrysler vehicle, your warranty will be honored regardless of what happens to each automaker.
The thing you also have to consider is depreciation. GM has created “GM Total Confidence” program which covers the loss in a GM vehicle’s value if when you later trade your vehicle in for a new GM model.
Even though there are many programs offered when you buy a new car from a company that’s facing bankruptcy, you still should not buy a car from a distressed company, if you especially like to trade your car in every few years.

Sources:
http://money.cnn.com/2009/03/31/pf/saving/car_incentive_willis/index.htm
http://www.autoblog.com/2009/03/30/details-on-governments-warranty-commitment-program/
http://www.thetruthaboutcars.com/gm-total-confidence/