What the post-bankruptcy GM means to you

General Motors quickly emerged from its May 31st Chapter 11 filing this morning, benefiting from the Chrysler bankruptcy process before them and Auto Task Force drive to get the corporate giant back on its feet. The transition from old to new GM should be rather seamless for consumers, at least initially.

GM has culled four divisions from its portfolio and down the road it plans to significantly reduce its dealer body by not renewing franchise agreements. These 1,100 dealerships, representing about 18 percent of GM’s total dealers, will have until October 2010 to sell their remaining cars. The product line will drop from 48 to 34 nameplates in the process.

This Q&A addresses some common questions, and we will continue to provide additional insights and advice as General Motors and Chrysler both begin their new chapters. For more information, go to our Auto Crisis page. Also, learn how bankruptcy works.

Who owns the new GM?
Earning the nickname “Government Motors,” the American tax payers are the majority owner for the new company. GM ownership breaks down to:

• The United States government—a 60.8 percent stake
• A trust fund (VEBA) that provides medical benefits for United Auto Workers retirees—17.5 percent
• The governments of Canada and the province of Ontario—11.7 percent
• Bondholders of the old GM—10 percent.

What brands and models are available?
The new GM will include Buick, Cadillac, Chevrolet, and GMC brands. GM has stripped itself of Pontiac, Hummer, Saab, and Saturn. The latter three divisions are being sold to other companies, so those brands are expected to continue to be available in the United States. Future GM models include the Buick LaCrosse; Cadillac CTS coupe, CTS Sport Wagon and SRX; Chevrolet Cruze, Orlando, Spark, and Volt; and GMC Terrain.

Will I be able to get parts and service for my GM car?
GM dealers will continue to provide service, as before. Hummer, Saab, and Saturn dealers will be supported until the divisions are sold off. It is expected that most dealers will transfer their franchise agreements to the new owners, enabling them to continue without interruption. In emergency situations, most of these vehicles can be serviced at any GM dealer. Perhaps the greatest consumer impact will be the significant reduction in dealerships, making car maintenance less convenient.

Keep in mind that you don't have to take your car to a dealership for servicing, even if it’s under warranty. A good independent shop, especially one that specializes in your car’s brand, should be able to handle routine maintenance and many repairs. Moreover, independent repair shops are often less expensive than dealerships and, according to our Annual Auto Survey, generally provide a higher level of satisfaction. You will need to go to a dealership, however, for warranty and recall work.

Will GM still back my warranty?
Yes, GM will continue to support its vehicles’ warranties. Responsibility for warranties for Hummer, Saab, and Saturn will eventually transfer to the new owners.

What if I want to sell my GM car?
Models from brands that are being phased out or sold will probably see a drop in value. But if the company re-establishes itself as a strong, stable automaker in the future, ongoing models could see a rebound in value. If you plan to keep the car for a long time, depreciation is less of a factor.

Should I buy a GM car now?
No reason not to buy a Buick, Cadillac, Chevrolet, or GMC vehicle. However, there are some considerations when choosing from a lame-duck GM brand. For instance, the future of Hummer, Saab, and Saturn is not yet carved in stone. Even when it is, it is unclear who will support current versions of those products, or for how long. Sales of these divisions are in process. Pontiac is being phased out, and finding long-term support for its products may be more difficult than with other brands.

That said, GM is offering some tempting sales incentives on many of its models, including ones that we recommend. And with slow auto sales and too much inventory, dealers are ready to negotiate. So, it’s likely that you could get a very good deal.

Several recent GM models have done well in our testing and are very competitive in their classes. Consumer Reports recommends the Buick Lucerne V8; Cadillac DTS; Chevrolet Avalanche, HHR, Malibu, and Silverado; and the GMC Sierra. The Cadillac CTS, and GM’s quartet of three-row, crossover SUVs (Buick Enclave, Chevrolet Traverse, GMC Acadia, and Saturn Outlook) all did well in our tests, but are not recommended due to below-average reliability in their first years. (Links in this paragraph go to model overview pages, where online subscribers can review ratings, pricing, reliability, and road tests.)

It’s important to remember that any deal is only as good as the vehicle you’re buying. As always, we recommend that you thoroughly research the performance, reliability, safety, owner cost, and owner satisfaction of any model you’re considering. Subscribers to ConsumerReports.org have access to our Ratings in all of those areas.

What if I have a claim against GM?
Under pressure from the government and consumer groups, GM has agreed to stand behind product liability claims for all GM cars and trucks that are filed after the company emerges from bankruptcy. However, hundreds of consumers with existing personal injury claims against GM will be left scrapping for the meager remains of the old GM.

To get answers to the most common questions and concerns about Chrysler’s and GM’s bankruptcy and reinvention, check out our Auto Crisis hub.

Comments

[Jay]

I can readily identify a reason why NOT to buy a GM vehicle....PRICE. They are playing a sucker's game, offering large cash-back incentives on list prices that have been jacked up into the stratosphere.

For example, a completely loaded Hyundai Genesis with a V8 lists for about $47,000. Compare that to a top-of-the-line Cadillac STS with incentives of $4,500, but with a list price of $62,000! The bottom line is that the Caddie has less horsepower and lower gas mileage, but will cost you over $10,000 more than the Hyundai's honest, up-front pricing.

[Andreas]

Jay - I am by no means GM fan, I have rented enough of them not to allow myself to purchase one. It is however absurd to compare Hyundai and Cadillac. Time will show if the Genesis engine will transform Huyndai from the discount brand name to a luxury brand. Come back in 10 years with that comparison, and you may have a point.

[coolcar]

Jay- completely agreed.

but Hyundai needs to charge less and offer good value because that is what they are known for... The cadillac may charge more because of the logo welded onto the grille... it comes from a well-known luxury brand. People are more willing to slap down that much money at a dealer that sells HIGH END cars... Hyundai sells the Genesis at the same dealers that retails the Elantra, Accent, Elantra Touring, Tucson, and Sonata- not so high-end models...

The truth is, most people are not familiar with all the cars in the market and where they could potentially save big bucks... Hyundai still has a smidgen of a repuatation of poor quality, even though they have come so far since their Excel years ago. Plus, if you come to work saying, "Hey, I bought a new Cadillac for 62 grand!", people give you high mental marks and think you will be the next Bill Gates. but if you say, "Hey, I bought a new Hyundai for 47 grand!", people will laugh their brains out. :)

[al2]

Everybody looks at the "other" guys and cost,in this case Hyundai.
Let us not forget that Hyundai is a "foreign" nameplate and even if it is assembled in the U.S. the money you spend on it goes back to a foreign company . . . plain and simple.
But Americans DON'T CARE about where anything is made today as long as they GET THE DEAL.
Very self centered . . . if you must buy a foreign car at least buy the one assembled in the U.S. and remember where the money is going.

[athar usmani]

I don't think Americans are self centered. They want reliable cheap transportation. A lot of foreign car makers have tried to make it here, including Fiat, Alfa Romeo, Renault, Rover, Citroen, the list goes on and on. All of the above fell on their face because they were expensive and unreliable. I have bought American cars until 1989. But two failed automatic transmissions and a leaking coolant system has taught me a lesson that is hard to unlearn.

[Jay]

If you want to pay $10,000 more for a Caddie that is inferior in every way to a Genesis except for the prestige factor of the brand, I can understand where you're coming from.

But GM is playing the same game with all their vehicles. They are offering discounts off list, but the list is ridiculously high.

Compare the Malibu to the Accord. A Malibu almost identically equipped is listing $5,000 higher than Accord.

I don't like the games that the "new" GM is playing. If they are rooking you up front, just imagine what they will do in the service department.

[Mike A]

Maybe I'll regret it, but 2 weeks ago I bought a brand new 2008 Pontiac Torrent. (That's right, there are still new 2008s out there.) I was aware of all the drawbacks, but I couldn't resist the price. The clincher was the $3,000 GM Card Bonus that was added to all the other incentives. The final price was about $9,000 below MSRP. This on a car that is relatively inexpensive to begin with. The bottom line is, I got the new Pontiac for the price of a 2- or 3-year old CRV, RAV-4 or Santa Fe. Another key factor is that the government is guaranteeing the 36-month bumper-to-bumper warranty regardless of what happens to GM.

[Jay]

Congratulations on your deal, Mike. Every person's purchase and subsequent owner's situation is different, so you may just have made the best decision possible. I hope your new Torrent gives you every reason to feel great about it.

[jim]

Hey, I'm a GM guy all the way. I have owned or own seven GM trucks and cars in my lifetime. I owned one Volvo and thats it. I think they make great products at a market price. That said, the BIG 3 have been getting over on americans for the last 30 yrs. And no, FORD is not exempt, just because they saw the writing on the walls before the others. They have all been living like a kid who got locked in a candy store for a day, and its been on our dime. Jay is right, even facing the toilet, they are still gouging us on the way out the door. I have happily given Chevy specifically a lot of my hard earned coin. But the BIG 3, including my favorite, GM, deserve whatever they have comming their way.

[Andrew]

Saturn Sky is a beautiful car...too bad it doesn't have an S2000 engine in it.

[rachelle B.]

I have always owned a GM vehicle. The latest was a 2008 Pontiac Grand Prix, the finest car I have ever owned. I will buy another GM vehicle if the G8 is replated as a chevy. If the new GM is going to suceed, they will have to make people like me happy.

[felix]

Will a site like this for GM car and truck parts still be around?

[TomF]

Alright, I will bite. I don't see how anyone prices an Accord $5K less than a similar Malibu. I just did the bottom-price-automatic comparison on Ed* and I get $1300 LOWER. Chevy did have a posted incentive of $2K, Honda had no cash incentive.
I like Hondas. I have recommended Hondas to some people. A similar Malibu just isn't $5K more than the similar Accord.

[ED]

Ok my 2 cents. Those that want to put down Hyundai, need a paradigm shift. Outstanding value made by americans in Montgomery, AL. Now for GM; the fact that Obama owed his soul to the UAW had everything to do with the GM Bailout. GM is not deserving of anestisia if it was needed while someone blew their brains out. You and I will pay for their mismanagement for years to come.

[jesse]

I can see how jay is comparing the Hyundai Genesis with the Cadillac STS, THEY ARE BOTH POORLY MADE.

[natalie]

I want to be proud of the quality and style of American cars and buy them because they are a good product at a fair price, not because they are a charity case that I buy to be "patriotic".