Local auto dealers are welcoming the news that the federal government will back new vehicle warranties on General Motors and Chrysler products.
Industry Minister Tony Clement said last week that Canada will follow the United States in guaranteeing warranties issued by the two auto manufacturers.
The long-term viability of both companies has come into question in recent months, leaving some vehicle buyers worried they could find themselves unprotected.
“Obviously the announcement of it is pretty important to us,” said Graham Moore, who owns Northwest Motors.
Pike Wheaton Chevrolet owner Gordon Pike agreed.
“It should take the fears out of buying a GM or Chrysler product at this time, because the customer knows that they’re going to have a warranty standing behind them.”
Pike confirmed that he’s heard some people express concerns about new vehicle warranties.
Meanwhile at Gary Moe Saturn, Gary Moe said he’s noticed a slowdown in sales, which he attributes to warranty worries and misinformation.
Used vehicle sales remain good, he pointed out, and business at his Gary Moe Hyundai dealership has been very strong.
“The Hyundai store, we’re going to have a record month, and it’s a hundred yards away.”
Moe thinks part of the problem is many people don’t realize that Saturn is a division of GMC and covered by the government guarantee.
Moore has also heard customers raise the warranty issue, but doesn’t think it’s affecting people’s buying decisions as much as their access to credit and financing rates.
Pike noted that all dealers — whether they sell domestic or imported vehicles — have been affected by banks and other financial institutions changing their lending criteria.
“So it’s harder for us to get our customers financed.”
Pike also believes many consumers have an overly pessimistic view of GM’s situation.
The company is a long way from seeking Chapter 11 bankruptcy protection, he said, but even if it were to take that step it would continue to operate while restructuring and strengthening itself to go forward.
“We’re not going anywhere as the dealer body, and the manufacturer is not going away.”
Moe stressed the same point.
“General Motors is not going to go out of business,” he said.
And in the unlikely event one of Red Deer’s GM dealerships closed, the others would service customers.
Chrysler is not going anywhere either, said Moore.
“It’s important to get that out to the public, that we are going to be around and the warranties are going to be backed.”
A restructuring plan provided by GM to the U.S. government in February suggested that Saturn could be wound up over time or spun off. Moe expressed confidence that the brand and its dealers will remain, and said he’s heard reports that a sale of the Saturn network is close.
Moore expects the situation for auto dealers to improve soon, with the credit crunch already being addressed. He added that the health of Red Deer’s new vehicle market should not be compared with the situation elsewhere.
“We’re lucky to be here in Alberta.”