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.
