There are some unhappy gearheads right now. As part of its effort to become profitable, General Motors announced it is shrinking its lineup from eight car companies down to four. On the chopping block are Saturn, Saab and Hummer, with Pontiac likely to continue, but on a much smaller scale. Ford has also announced that it is paring down brands to focus on its core of Ford, Lincoln and Mercury cars.
But as auto enthusiasts mourn the passing of brands that gave us the incredible off-road prowess of the Hummer H2 or the venerable American muscle of the classic Pontiac GTO and Trans-Am, regular Joe Saturn Driver is left with a lot of questions. Here's what you need to know:
What exactly is happening to each brand?
Right now, all we know is that GM and Ford are looking to end their ownership of certain brands. That doesn't mean that the brands themselves will necessarily end. It is much cheaper for Ford and GM to sell them to another company rather than close the brands. The best case scenario for many of these brands would be to find a buyer and continue selling cars.
While Ford had some success selling its Land Rover and Jaguar brands to Tata Motors last year, with the credit markets tight, it might be harder for Ford and GM to sell such brands as Saab (in fact, Saab just filed for bankruptcy, indicating that a sale isn't likely) and Volvo. Selling domestic brands like Saturn is even more difficult -- so difficult that General Motors doesn't even appear to be planning on a sale. If that's the case, Saturn will close its doors. Hummer is in the same situation. GM announced that Pontiac will likely continue, but as a small, performance-oriented brand with a trimmed model lineup.
What happens to my warranty?
If you own a car from a brand that's up for sale or is likely to be closed, your warranty will be honored. A warranty is a contract between the car company and you; if the car company is sold, the new owner takes over the obligation. If the car company closes, the parent company is still responsible for the warranty. You may have to travel a bit further to get your car serviced, particularly if your local dealership has closed, but your warranty will continue to be honored.
What happens to my dealership?
As car companies shut their doors, it is likely that they'll take some dealerships with them. Even without car companies dying, dealerships all over the country are going out of business because of slow sales. While no one can say what will happen to every local dealership, there are some precedents for what happens to them when a car company goes under. When Isuzu announced that is was leaving the U.S. market, some dealerships closed shop, while others stayed open as parts and service shops. Many of the dealerships that sold other brands alongside Isuzu stayed open and still provide service and warranty work for Isuzu owners.
Will I be able to get parts and service for my car?
Anyone who has ever had a classic car can attest to the difficulty of finding replacement parts for a car that's no longer made. However, modern car owners are lucky in this respect: many of the car companies on the chopping block share components with models from companies that will continue. So, you don't have to worry about getting parts for your Saturn Aura because it shares many components with the Chevrolet Malibu. Also, because so many of these cars will be on the road for years to come, parts manufacturers will continue to make replacement parts. At the same time, mechanics will have already trained on these cars, so finding a qualified one shouldn't be too hard.
Is now the time to buy from a doomed brand?
While there are likely to be heavy discounts on cars from discontinued brands, a lot of buyers will wonder if the deals are worth taking. The answer depends.
Most of the cars from the brands on the chopping block are good cars -- they aren't going to turn into pumpkins the second the brand closes its doors. But, they may lose their value more quickly than cars from brands that are continuing. If your car company is bought by another company, your car's depreciation should be relatively stable. After all, Jeep has been bought and sold many times, but Jeep models are still popular, which translates into value for owners.
However, if your company closes its doors, your car could depreciate steeply, making that great discount you got at the dealership seem like less of a deal. Still, if you intend to drive the car for years to come, then depreciation is less of a factor. If you're looking for a car you can sell in just a few years, consider a car from a company you know will be around for a while.