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Are Orphaned GM Car Owners at Risk?


What happens when your brand disappears.

Pontiac? Goodbye. Saturn? So long. Saab? Off to the old junkyard in the sky.

Those are the three brands that General Motors Co. is shutting down as it remakes itself into a smaller, nimbler and -- it hopes -- profitable automaker.

But just because the brands are disappearing doesn't mean their owners will be left out in the cold, even after the dealerships that sold them their vehicles shut their doors.

For owners wondering what the end of the brands means, here's some answers.

Q: What happened to Pontiac, Saturn and Saab?

A: Shutting down Pontiac had been part of GM's restructuring plan since early last year. It had hoped to sell Saturn to the auto dealership chain Penske Automotive Group Inc. (PAG), but Penske abruptly backed out of the deal last autumn.

GM had planned to sell Saab to a Swedish race car manufacturer, but that deal also collapsed in late 2009. GM has begun dismantling the brand, though it is still hearing offers from other buyers.

Q: Should I be worried if I own one of those vehicles?

Owners of those vehicles have little reason to worry, at least when it comes to getting their cars and trucks serviced, GM spokesman John McDonald says. As it did when it shut down Oldsmobile in 2004, the automaker will continue to honor existing warranties on all Pontiac, Saturn and Saab vehicles. GM's standard warranty is five years long.

"People should feel very comfortable that they will be able to have their vehicles serviced," McDonald says.

Will GM have the parts to continue providing service for that long?

A: GM has enough spare parts to last the life of all warranties on vehicles from discontinued brands, McDonald says.

It probably has enough to last even longer, he says. In addition, many GM vehicles share similar parts that will remain compatible in vehicles from shuttered brands.

"Just because you wind it down doesn't mean you don't have a million, bazillion parts in the system," he says.

However, he cautioned that parts shortages could arise many years down the road on some specialized components. Think headlights, taillights, engine grilles -- mostly cosmetic parts that are specific to a single model.

Q: Will I be able to continue going to my current dealer for service?

Yes. Although the franchises of discontinued brands will gradually be phased out, if your dealer owns franchises from GM's remaining four brands (Chevrolet, GMC, Cadillac and Buick) then its doors should remain open and you should be able to return for service.

However, if your dealer only sells vehicles under a discontinued brand or was targeted for closure in GM's wave of dealership shutdowns announced last year, then GM is supposed to direct you to a new dealership.

Q: What about residual value? Won't my Pontiac be worth much less as a used car now that the brand is disappearing?

There is likely to be a drop in value, but it shouldn't be very significant, says Eric Ibara, director of residual consulting for the car pricing guide Kelly Blue Book. When GM ended Oldsmobile, a Kelly Blue Book analysis indicated residual values took a hit between 2 percent and 10 percent, depending on the model, due solely to the brand's disappearance.

The residual values for the brands GM is eliminating now could hold up even better, Ibara says, because much of their remaining inventory has already been sold, helping prop up the value of those vehicles on the used-car market.

"We think that any loss in value because of the announcement (that a brand is disappearing) is going to be rather small," Ibara says.

Isn't GM also getting rid of Hummer?

A: Yes, but it managed to find a buyer for the brand in Sichuan Tengzhong Heavy Industrial Machinery Corp., a Chinese heavy equipment maker. The sale is still awaiting approval from US and Chinese regulators and is expected to close early this year.

In the meantime, GM is continuing to honor Hummer warranties. If the sale goes through as planned, Hummer's new owner will take over sales and service responsibilities from GM, McDonald says.

Copyright 2010 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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