What Happens to Your Car When the Manufacturer Goes Out of Business?

Cars are a major part of many people’s lives, but not all automakers survive in the car business. A few car brands that are now defunct are Pontiac and Saturn. A few years back, Automaker General Motors faced bankruptcy, and EV makers like Rivian have seen a reduction in stock prices. 

So, as a car owner, does it affect your vehicle when the manufacturer goes out of business? 

Why Do Automakers Go Out of Business?

Like every other business, automakers could go out of business, and this often happens when the brand isn’t making a profit. Automakers need to make a profit to survive in the industry. As such, their revenues must exceed their expenses. Car brands that fail to turn a profit go out of business.

However, car brands that have gone under are usually those that are subsidiaries of bigger car companies. For instance,  General Motors started Saturn in 1985. The idea was for Saturn to compete with Japanese automakers like Toyota and Honda, considering how popular Japanese brands were becoming in the market. 

Sadly, Saturn never became popular or profitable, leading GM to kill the brand in 2010. Ford also had a similar experience. Ford had a subsidiary called Mercury; it was envisioned as a premium brand more upscale than the regular Ford cars but less luxurious than a Lincoln. The Mercury brand only succeeded for 70 years before becoming less profitable. So Ford also killed Mercury in 2010.

What Will Happen to Your Car if the Automaker Goes Out of Business?

There are many possible situations if an automaker goes out of business. And what would happen to your car depends on many factors. The number one factor (which is the most important factor) is the type of company. If it’s a subsidiary owned by a larger automaker, such as Saturn, nothing would really happen to your car. The parent company would probably honour the car’s warranty, but the warranty package would have to be backed by the manufacturer. 

However, if the parent automaker went out of business, what would happen to your car would probably be worse. While this hasn’t quite happened yet, however, when it does happen, it means the value of your car will crumble instantly.

What Could Happen If My Auto Dealer Goes Out of Business?

It’s rare to find auto dealers that go out of business. But that doesn’t mean it cannot happen. However, one that is common with dealerships is to stop selling new cars and focus on old used cars. In cases like this, you could still get your warranty from the dealership. In a country like Nigeria, it also depends on whether an automaker backs the dealership. If not, then getting your warranty could be impossible.

What Happens When Auto Makers Leave Their Nigerian Branch?

This is a significant worry most car owners in Nigeria have. Due to the economic situation in the country, automakers with dealership branches in Nigeria are bound to move out if the situation becomes unbearable for them. Unfortunately, such a situation will affect the warranty of customers who bought their cars in Nigeria.

Conclusion

If you buy new cars, there are benefits associated with getting a warranty from your dealership or car manufacturer. However, when they go defunct, you’ll automatically lose every warranty you have with the brand.