WASHINGTON (AP) — General Motors and Chrysler said Friday an Obama administration program to backstop warranties, which ended with GM's emergence from bankruptcy, helped the companies stabilize sales during their period of transition.
President Barack Obama made the warranty guarantee program part of the government's multibillion dollar effort to steer the companies through bankruptcy proceedings and bolster consumer confidence in their vehicles. GM and Chrysler continued warranty coverage during their respective bankruptcies, so the program was never used.
"I want to remind everyone that if you are considering buying a GM car during this period of restructuring, your warrantees will be safe and government-backed," Obama said on June 1 as GM entered bankruptcy. The Detroit automaker exited Chapter 11 protection on Friday.
A Treasury Department official who spoke on condition of anonymity said the warranty commitment programs would end for both companies since their restructuring had been completed and their risk of not honoring their warranties had subsided. The $650 million in taxpayer funds for the program will be returned to the Treasury, said the official, who was not authorized to speak publicly.
In June, General Motors sales fell 33.4 percent despite incentives and discounts, but its decline improved when compared with previous months. Chrysler, which emerged from bankruptcy protection in June, saw sales drop 41.9 percent for the month, but that was better than previous months.
GM spokesman Greg Martin said the warranty program "added an extra measure of assurance at a time when consumer apprehension was potentially at its highest."
Kathy Graham, a Chrysler spokeswoman, said Obama's efforts "actually spurred (consumers) to come to a Chrysler dealer."
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