Bankrupt Brands and Dealerships: What to Do

While the economy may be slowly improving, companies are still going out of business. Suzuki decided a few months ago that it will no longer sells cars in the United States. This meant dealership closures nationwide. So, what happens when the dealership you purchased your car at goes out of business? Or, if you have an extended warranty, what happens when that company goes out of business? This article will give you the run down of what will happen and what you can do. 

What happens if my local dealership goes out of business?

  • If you need warranty service, you will be able to get service at another dealership. This may mean some travel, which can be inconvenient. Luckily, many manufacturer’s offer a rental car if you are having warranty work performed and it takes more than a few hours. 
  • Many dealerships may close their new car division but keep their used car portion open. Also, they may keep their service center open. While you may not be able to get warranty work performed, you can still get scheduled maintenance and non warranty repairs performed locally. 
  • In the short run, you may be able to get a great deal on a car. They will sell their vehicles at low prices to prevent them from sending them back to the manufacture. However, in the long run, the dealership closure may lead to less competition and higher prices on vehicles.
  • Consumers in some areas may have trouble finding their preferred brand locally, which means fewer choices when it comes time to buy.

What happens if my extended-warranty company goes out of business?

First, it is important to determine what type of extended warranty you have. 
  • Manufacturer-backed — these warranties will be honored by the parent company or the federal government and are valid nationwide.
  • Dealership-backed — it is backed by the dealership where you purchased the warranty and is valid only at that particular dealership. 
  • Independent (a.k.a. aftermarket) — a third-party warranty company underwrites your warranty.
If you have a manufacturer-backed warranty, then even if your local dealership closes, you will still be able to get warranty service at the next nearest dealership. If you have a dealership backed warranty and the dealership goes out of business, then you are out of luck. If a dealer sold you a warranty from a third-party company that has gone out of business, you may be able to appeal to the dealership. You can either see if they will still make good on your warranty contract or if they will sell you a new one at a significantly lower price. 
Does all this mean that you should immediately trade in your vehicle? No. From an economic standpoint, holding on to your car may be the best thing to do. But, if you do decided to trade it in, look for an extended warranty that you trust with whom you are purchasing.