If you have been watching the news today, I am sure you have heard the news that President Bush will be lending Chrysler and General Motors up to $17.4 billion in short term loans from the US government. The package does come with strings attached; they expect the manufacturers to be viable by the end of March and they put significant limits on executive pay and prohibit either company from issuing new dividends.
So, what does this mean exactly? It seems the ball is back in the manufacturers’ court and they have to figure out a way to significantly cut company debt. Expect to see dealerships continue to close, service personnel to dwindle significantly, and the quality of warranty repairs, coupled with time allotted to warranty repairs, to be severely threatened. But what is the alternative? As the President pointed out this morning in his address, if either company declared bankruptcy, their service contracts and warranty obligations would not be a main priority.
Automotive Consumer Advocate and 1-800-LEMON LAW Communications Director Michael Sacks will be discussing the bleak auto industry outlook and answering automotive warranty questions tomorrow morning at 11am on Consumer Hotline on WDEL AM, 1150 on the dial in Wilmington, Delaware. Last time, Michael appeared on the program, a caller phoned in with a Volvo problem and ended up $7,000 richer, so it pays to listen.
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