Dealership Closings and Your Warranty

POSTED BY Gregg on Sep 27 under warranty

Dealerships seem to be shutting their doors in record numbers this year. The economy, gas prices and the credit situation are putting a tight squeeze on dealerships and those that were on the edge are being forced to close. Automotive News reports that 226 GM dealerships have closed this year through the end of August and quotes a GM executive as saying the total by the end of the year could be 350 to 400.

News stories about individual dealerships closing have been splashed on TV and in local newspapers. GM’s largest Chevrolet dealership, Bill Heard Enterprises, that owns 13 dealerships across the country abruptly closed all their locations on Tuesday, September 23rd.

Consumers are worried that their warranties won’t be honored. As far as factory warranty coverage goes, there’s no need to worry. All the manufacturers will honor their factory warranty at any of their franchised dealerships. The factory warranty is not just for one dealership. With all the closings though, you may have a more difficult time getting into the next closest dealership for warranty work because everyone will be rushing in to get warranty work performed.

You may have to do some legwork if you have a used car warranty or bought a service contract through a dealership that is now closed. If the used car warranty or service contract is backed by a separate company, contact them to put your mind at ease and find out how the closure could impact you. If the warranty is one offered by the dealership with their name on it, I strongly suggest you look over your contract. Find the name of the insurance or service contract company that’s backing it and call them as well to find out what is going on. It’s better to do it now than wait until you need a problem repaired.

At the rate closures are going, we could see a very different situation with dealerships in the next year or two. There will be fewer dealerships around. The drop may be far more significant than in past years. You could be driving much further to get your warranty repairs done.