Will You Get Stuck With a Warranty Issue When Your G.M. Dealership Closes?

September 28, 2009

As you may know, GM is closing 1,300 franchised dealerships across the country and they offered these dealers $100,000. to $1 million to wind-down the dealerships. In order to get this wind-down money, the dealers had to sign an agreement that they would not be able to order any new vehicles. Well, the Cash For Clunkers program has essentially eliminated most of their inventory, leaving many of them with a 30 to 60 day supply of vehicles on hand. Once that inventory is gone, GM has allowed them to discontinue their franchise rather than waiting until January 1, 2010 (as originally agreed).

If you remember, GM had sent out notices to the 1.300 dealers telling them that their franchise had been cancelled and it was up to the individual dealer to release the information that they would be closing. However, they said that these dealers would not be closing until late 2010. So, here we are one year ahead of schedule and the public does not know if their dealer is one that will be terminated. These dealers represent 21% of the total of GM dealers in the nation. Also, GM has stated that it plans to close a total of 3,500 to 3,800 of its 6,100 dealerships by the end of 2010 or 57% to 62% of their total dealerships. GM states that this will save them $1,100,000 per dealer per year

Here are some of the problems that we see:

1. Many dealerships offer a Dealer Backed Extended Warranties. If you purchased  a dealer backed warranty, you should ask for a prorated refund if you believe that your dealership has been terminated.

2. You need to get a printout (service records) from the dealer for warranty purposes. This report will need to list the service that was performed on the vehicle (as well as when it was performed and the mileage when it was performed). Having these records are necessary if you have a manufacturers warranty claim and it is also very beneficial to a new auto care facility that will be performing your service work in the future.

3. You should be hesitant to take your vehicle to a GM dealership for any minor or major repair if you suspect that this dealer may be closing their doors. If they do go out of business, other local GM dealers should be able to handle a part(s) claim in a warranty situation but they probably won’t cover the labor side of a warranty claim.

4. If you believe that the dealership that you use is going out of business, you need to get acquainted with a new shop right away. It would be a good idea to have this new shop perform some minor services to insure that you are comfortable with them. It is never a good idea to have a break-down situation where you are forced to take it to a shop that you are unfamiliar with.

 GM hopes that by eliminating up to 62% of their dealerships that the remaining dealerships can be more competitive and charge more for their vehicles.

You may want to consider selecting an independent auto care facility. Well equipped and professional shops have the same tools and skills as the dealership and are able to charge significantly less for service and repairs. This is because shops can install O.E.M. and other high quality parts for less due to their lower overhead costs. Recently, Consumer Reports stated that when using an independent shop you can expect to see savings of over 30% when compared to the dealerships. When selecting a new auto care facility for your vehicle, it may be tempting to use one closest to your home or place of employment or perhaps one that a friend or neighbor recommends. Before trusting anyone with your vehicle, spend a few minutes on line checking them out.

  1. Check the shop out with the Better Business Bureau at www.bbb.org The BBB typically has a letter grading system. Only use shops that have an A rating! Some shops may have an A rating but have numerous resolved complaints against them so consider crossing them off your list if you are not comfortable with the volume of complaints.
  2. Many times the BBB report will indicate how many years they have been in business. You will want to select a shop that has been in operation for many years and have the expertise and knowledge of operating a shop so that they will be there for many more years to come.
  3. Make sure that the shop is clean and well kept as this may be an indication of how they will treat your vehicle.
  4. Getting a written quote for major services or repairs is a good idea. You may also want to get a second opinion from another good shop but be sure that they quote you for the same quality parts and services.
  5. Always pay for your service with a major charge card so that you will have the ability to file a dispute with the charge card company if a problem arises.
  6. If you live in the Phoenix area, we invite you to use www.yourautonetwork.com We have researched all of the local auto care shops in the area and have listed the top rated shops for your consideration. Those living outside the Phoenix metropolitan area can find more tips on selecting an auto care facility by going to this website and clicking on Business Criteria.

Cary Lockwood of www.yourautonetwork.com is an automotive consumer advocate and the host of Your Auto Network’s Calling All Cars radio show on KXXT 1010 AM Phoenix and KXEG 1280 AM Phoenix. Cary is also on the Better Business Bureau’s Auto Repair Advisory Committee. Cary has over 30 years in the auto industry as an engineering technician at G.M. as well as being an auto repair shop owner for 10 years. You can download the radio show by going to www.yourautonetwork.com You can also post your automotive questions through the contact page of the website.