Questions and answers on the Warranty Commitment Program, designed by the Treasury Department to ensure that customers will be protected even if GM or Chrysler slides into bankruptcy.
Q: What exactly is this program?
Starting Monday, buyers of a GM or Chrysler vehicle will have their warranties honored if the maker goes bankrupt.
The government will finance the companies' cost to repair covered vehicles at the dealership or through a third party.
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The funds will be set aside in a separate federal account. The companies will provide 15 percent of their expected warranty costs, and the government the rest.
The funds are to come from the government's Trouble Asset Relief Program (TARP). The Treasury wouldn't say how much money it's putting up for the program, but it's expected to be in the millions – significantly less than the $17.4 billion in bailout money the companies have already received.
Q: I just bought a car last week. Is my car covered?
Unfortunately, no. The plan is available for vehicles purchased during the companies' “restructuring period,” which the Treasury is defining as beginning on March 30.
The period will end when the companies emerge from restructuring – in other words, when they are viable without government help, or emerge from a bankruptcy.
Q: Are only Chrysler and GM cars covered?
Any U.S. manufacturer is eligible, though Ford, which is not seeking government aid, says it won't participate.
Foreign automakers are not eligible.
Q: How do I get repairs?
Consumers don't have to do anything out of the ordinary. The program is primarily a financial one that would allow GM or Chrysler to cover the cost of repairing your car for free, or under terms of the warranty, should the companies enter bankruptcy.
Q: How does this differ from the warranty that would normally come with my vehicle?
It isn't different – it's the same warranty that comes with the vehicle.
Q: Why is the government doing this?
Aaron Bragman, research analyst for IHS Global Insight in Troy, Mich., calls the program “a piece of a larger puzzle.”
“The government's main responsibility here is to restore consumer confidence – that their job, home and investments are secure,” Bragman said.
“Whether or not that's going to make a difference remains to be seen.” Associated Press