The government said on Marh 30 that it is guaranteeing the warranties of new vehicles bought from General Motors and Chrysler in a bid to boost consumer confidence and auto sales.
The Treasury Department said it had taken the temporary step to allay consumer worries about buying new cars from the two nearly bankrupt manufacturers that are on government life support. The new plan addresses fears that the new car warranties would be worthless if the companies collapse.
The program is designed "to give consumers who are considering new car purchases the confidence that even in this difficult economic period, their warranties will be honored," the Treasury said. "This program is part of the administration's broader program to stabilize the auto industry and stand behind a restructuring effort that will result in stronger, more competitive and viable American car companies."
Both GM and Chrysler have agreed to participate in the program, which will be in effect during the period in which they are restructuring, the Treasury said.
The Treasury's warranty program will be funded with cash contributed by the manufacturer and a government loan to pay for repairs covered by the manufacturer's warranty.
Copyright Agence France-Presse, 2009