One Thing About those Government-Backed General Motors Warranties

General Motors seems to be pushing their great warranty in a recent TV ad campaign. Looking at their website, they sure do seem to have the best new car warranty around:

And why not. General Motors has nothing to lose at the moment. They probably know that there is nothing stopping a bankruptcy filing, and President Obama told the whole country that warranties on new GM cars will be good no matter what happens to the company, as they will be backed by the Government. So, they are kind of giving these warranties away at no cost to themselves.

In a bid to boost flagging auto sales, the federal government will pay for any warranty repairs on a General Motors or Chrysler vehicle if either company can't because of financial problems or a bankruptcy filing, President Barack Obama said on Monday.

Obama said in a speech. "Let me say this as plainly as I can. If you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired just like always,""Your warranty will be safe. In fact, it will be safer than it has ever been. Because starting today, the United States will stand behind your warranty." - Autoweek

Totally ignoring that simple fact that the Government was wrong to throw bailout money at the businesses certain to fail, the plan to have the Government back the cars in case the carmaker failed in order to keep up sales seems like a good idea on the surface.

Too bad that there is no way for the Government to convince me that they just won't change the terms of the deal at some point later on, just like they keep changing the rules on the banks that accepted the TARP money. So who knows if or when that wonderful US-backed warranty will turn into a huge anchor chained around your neck!

No thanks!

Bonus Issue: While this will cost GM nothing, it will cost the other car companies in better financial shape customers and added expense as they get forced to improve their warranties to meet the better deal that GM has offered. This of course now risks putting other car companies into worse financial shape as Government assistance has allowed GM to re-price the market below a profitable point. This in itself is a huge reason why the Government should have let GM fail, as a measure to protect the rest of the car industry.

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