How Will Chrysler And GM Bankruptcies Affect Consumers And Their Vehicles?

In the aftermath of the Chrysler and GM bankruptcies and pending dealership closures, drivers who own a Chrysler or GM vehicle – or are considering buying one – may be concerned as to where to take their vehicles for maintenance, repairs and warranty work. The Auto Club offers these questions and answers to help clarify this aspect of the manufacturers’ bankruptcies:

Q. Why are GM and Chrysler closing so many dealers?

A. The reduction of 2,600 GM dealers is part of a restructuring plan that the manufacturer was required to complete by June 1 prior to going to bankruptcy court. GM filed for bankruptcy on June 1. The deadline was set by the Obama administration in order for GM operations to be eligible for additional funding to keep GM open.

Q. What is Chrysler’s status?

A. Chrysler filed for bankruptcy on April 30. It also is reducing the number of dealership franchises as well. Chrysler told the court on May 14 that it will break its contracts with 789 dealerships nationwide, including 32 in California.

Q. If my local GM or Chrysler dealership closes where can I get my vehicle repaired?

A. The AAA-Approved Auto Repair Network with 6,200 dealerships and independent auto repair facilities in the United States provide repairs by qualified and quality automotive technicians.

Q. Where can I find one of the AAA-Approved Auto Repair dealers or independent repair facilities?

A. A directory of AAA-Approved Auto Repair facilities can be obtained by visiting, or a local Auto Club office or calling the toll-free telephone number on your membership card. The online version of the directory is updated regularly.

Q. I have a factory warranty with my vehicle, but if the dealership where I purchased the vehicle closes, what should I do?

A. Check your vehicle owner’s manual for a customer service telephone number to determine your options for work covered under the factory warranty. The manufacturer should be able to provide repair options which may include independent repair facilities.

Q. I purchased an extended warranty with my vehicle, but the dealership where I purchased the warranty is closing, what should I do?

A. Any AAA-Approved Auto Repair facility can service your vehicle with an extended warranty. Check your extended warranty contract packet and contact the customer service phone number for details on how to maximize the benefits of your extended warranty. In some situations you may be required to pay for the repairs and then submit for reimbursement from the warranty company.

Q. What about factory warranties on new vehicle purchases?

A. We believe that there will be no issues with factory warranties and they will continue to be honored although consumers may need to driver farther if alternative locations are not provided.

Also, the Obama Administration is launching a new program that will provide government-funded protection for warrantees issued by participating domestic auto manufacturers. The program will be available for all new warranties on new vehicles purchased from participating auto manufacturers during the period in which those manufacturers are restructuring. Both General Motors and Chrysler have already indicated their intention to participate.

If you experience problems in obtaining a free recall repair, you can contact the National Highway Transportation Agency (NHTSA). It’s toll-free telephone number and street address is also on all recall notices: 888-DASH-2-DOT (1-888-327-4236), 1200 New Jersey Ave., SE, West Building, Washington, D.C. and on the interactive web site, Remember to hold on to all receipts for service related to the recall.

Q. What if GM or Chrysler issue a recall notice? How will I get my vehicle’s recall taken care of if the manufacturers declare bankruptcy and/or close the dealership where I purchased my vehicle?

A. Generally, when a consumer receives a notice for a vehicle or vehicle part, a phone call to the dealer’s service department would be made to arrange for the vehicle or vehicle part to be repaired. GM’s timetable to close dealerships with poor service records and low sales would be completed through 2010. Chrysler said it will end its contracts with the 789 affected dealers on June 9. Check Chrysler’s published list of dealer closures, then call the nearest open dealership to schedule an appointment.

Q. Getting my vehicle repaired will be a moot point if the repair facilities can’t obtain parts from suppliers which manufacturers like GM and Chrysler provide funding for. How will my vehicle get repaired then?

A. There is still $5 billion in the Supplier Support Program not yet released from the federal government to suppliers who manufacture headlights, steering columns, engine components and other vehicle parts. GM has said that it will advance its monthly payment to its suppliers earlier in late May versus June 2 in order to helps suppliers fulfill its parts orders. Advancing payment will help suppliers since it’s before GM potentially files for bankruptcy. Already, GM has informed its suppliers that the manufacturer will be shutting down its factories for a large portion of the summer.