Would you purchase a vehicle from a company that was in Bankrupcy?

[therron57]

I have been hearing a lot from the various experts on the problems of the oil companies... I hear from some who want to see them get a bail out as they believe that the companies are too intertwined with the economy to be allowed to fail and that the loss of them would lead to the loss of over three million jobs and the failure of many other businesses. I have heard from some people who believe that the car companies should go into Chapter 11 and have reorganization to have new more forward looking management and to have the ability to get out from under the union contacts they have (even though the labor costs only make up 8% to 10% of the cost of a vehicle and the typical wage is at $14) One does not know however if these companies would survive after the Chapter 11 or if the people would purchase a car from a company that was in bankruptcy... The questions I have for you today are: 1.) Would you purchase a vehicle from a company that was bankrupt. 2.)If not, why not? 3.)And if so, what would it take for you to consider it? 4)What perks would you demand from the company... low prices, guarantees, service... what would make you consider purchasing a vehicle from a bankrupt company? And for those who you who are in the know, Is there a good reason for not purchasing a car from a bankrupt company? Meaning... Is there any real liability or risk for the consumer who purchases a car from a bankrupt auto company or would it just be a perceived but unreal thing?

[ezri]

If I am to purchase a vehicle, I would purchase it from a company that is about to be bankrupt or has been bankrupt. The reason is that they will not shoulder the whole process of registration, and my car insurance may not be in vain since the company that has sold the car has been bankrupt. I would rather have a second hand car with a complete insurance and all than to suffer the consequence of purchasing it with a bankrupt company!

[curran]

Thanks for posting... I have not seen the auto companies "shoulder the whole process of registration" It may be something that the dealers who sell the cars to the consumers do... The dealer sometimes does assist in covering this cost to close the deal when they are selling new cars... The dealers are independently owned businesses and are not owned by the big three car companies. In regards to the car insurance companies, I doubt that they would fail to offer insurance if you purchased a car from a bankrupt big 3 car company as I have looked to see what the experts are saying and this was not one of the problems they mentioned... There are though some concerns regarding product warrantees and parts availablity which would need to be guaranteed in order to build up consumer confidence and also the problem of lowered car resale values which does not seem to be easily remedied.

[armin]

Interesting discussion, Whiteheron. I think, honestly, that the risks of buying from a bankrupt company are more perceived than real. The history of typical Chapter 11 bankruptcy shows that most companies who go into Chapter 11 and do a successful restructuring emerge much stronger than they entered. In fact, most of the bigger companies that went into bankruptcy over asbestos lawsuits came out of bankruptcy with their stock prices higher than ever. In other words, many companies that successfully navigate bankruptcy do not go out of business. Instead, they get more efficient. The one thing that would concern me in buying a car (or any other product) from a company in bankruptcy is what sort of changes they might make in their obligation to their customers. Reduced warranties would be one way to cut back on paper indebtedness, for instance. Among my concerns for "just let them file bankruptcy" is that it would trigger a cascade of bankruptcies in supporting industries because part of the bankruptcy settlement would be reducing their indebtedness to suppliers and debtors. If that happened, businesses that make most of their money selling to the auto industry could very well face bankruptcy themselves.

[ji]

Dear chameleonsdream, Thanks for responding to the discussion and for furthering it along I agree "that the risks of buying from a bankrupt company are more perceived than real" yet the concerns that you mentioned about warantees do join the concerns that experts have about parts availability and also resale value... There are perhaps ways to sell the warantees to other companies and insure that they will be honored and to guarantee part availablity but the issue of the lower resale values seems to be one that no expert has devised a fix for. The interdependence of the companies in the economy and the intertwining of the car companies with the economy makes the possibility of " a cascade of bankruptcies in supporting industries" that sell to the car companies and also to a closure of many car dealerships and parts stores this of course would result in millions more jobs lost, homes and businesses lost, and decreased tax revenues, and could potentially cause more problems in the already fragile economies of areas like Detroit which are already hurting severely due to their large numbers of home mortgage forclosures and also the National and International economies. And there would perhaps remain one of the big issues... the question of what to do with the retiree pensions that must be paid out. I am hearing from GM that it does not have enough money now and cannot survive a bankrupcty... If it were to fail to survive, then what would that mean to the economy...? Do you think that it would survive? If so why? If the suppliers and distributers of parts and the dealers were forced into bankrupcty, then what would the effect be on the consumers and on the economy? I am curious about these things and wanting to learn. Thanks again for posting.

[lathrop]

I would never choose a car of that make. Better getting a second hand one, but with better service and no problems to get any parts I might need without having to visit car scraps as I have to do now. But only because my car is too old and I don't want to invest much in new parts.

[vanaken25]

Wondering what make of car you like best? Re: the question I asked... It seems like the issues of service and parts availability are big ones for you... And that you are already having to suffer from having a car that is old and would not want to suffer if you were purchasing a new used car... I can understand that concern. Thanks for posting.

[aldric13]

Wel I am a Dodge person so I Would have to say yes . To me just because they are in bankrupcy shouldnt mean that the quality of work should go down! Of course if the wages go down for the people the price should also come down. One thing I dont think they should do is break the Union!With all the work that came into having unions they should keep that. Just look how the country has gone down when people have broke with the Unions this is a unfair practice all the Unions want is a fair days work for a fair days pay. I really cant understand how the companys that are in trouble got so far into trouble! Do you?

[delton]

I never knew that you were a Dodge person... grins. My dad was a Ford person... He used to work for Ford Aerospace as a facilities planner and used to love those Mercurys. I can still remember how excited he was to get his Lincoln Continental. I am with you in thinking that the car prices should come down for the consumers and that the car quality should go up. I am also with you in thinking that the Unions are needed and should remain unbroken. I am in support of the Unions as I have read elsewhere that the non Union shops cause their workers to have more injuries and just dump their workers on the local governments to take care of as they do not cover them after they let them go... There are also apparently a lot of part-time workers and contractors being hired by these companies as they are trying to avoid having to give benefits. There is no excuse for a large company to treat employees this way or to slough off their responsibility to take care of their employees onto the community at large, translate this to mean... They are transferring the responsiblity to care for the workers to the taxpayers and with the increased rate of injuries due to the exploitation of these workers, that is a lot of additional costs that the taxpayers would not have to otherwise bear..

[matchitisiw]

After reading the words of the experts who looked at the industry and also the words of the car companies...In regards to what caused it... 1.) Look to the Federal government, the poo pooing regarding the need for energy conservation, the poo pooing regarding the need to have less polluting vehicles, the poo pooing regarding the need to have better cars... 2.) Look at the Federal tax code which gave a $25,000 tax break for the purchase of SUVs used for work but gave only a $3,400 max tax break for the purchase of a hybrid car or a fuel efficient car... and you know why the car companies continued to build these cars... The demand for these cars was artificially inflated due to these tax breaks on the SUVs... so the Federal Government can be said to be a big culprit in this area. 3.) In addition, you have the failure of Bush to meet with the Big 3 auto companies enough and his devaluing of them; And the majority of those in Senate and Congress were not interested in changing the tax code to keep the jobs here rather than letting them go overseas. 4.) the distain that many Americans have had for purchasing American products and also unfortunately the fact that there is a long history of the car companies building the cars to fail after awhile rather than building these cars to last, the protectionism and unfair markets overseas which give other car companies an advantage... Planned poor quality. 5.) the fact that our car companies are saddled with the cost of health insurance and in other countries the governments pay for health insurance 6.) the fact that the car companies are now administrators of the pension plans for the retired and injured workers... and unfortunately it is not just the rank and file workers that are being covered by this pension plan but also the overpaid CEOs who continue to get outragious pensions even after they led these companies into the ground. 7.) The failure of the CEOs and management excutives to guage the needs and wants of the people and their stupidity in believing that the artificially induced demand for SUVS would continue. 8.) The failure of the CEOs and management excutives to actually build the cars that we want... The companies spent a lot of money in research and design but did not apparently come up with things that we like to purchase and that we can afford to purchase. 9.) The lack of innovation in the industry... There was a tendency toward repetition rather than exploration in the whole industry regarding the development of alternative fuel sources or better engines, better motors and better batteries.