Consumers in limbo over GM bankruptcy

May 31, 2009 6:12:22 PM PDT
General Motors is expected to file for bankruptcy on Monday. That announcement follows news that GM bondholders have signed off on a deal to exchange their unsecured bonds for a ten-percent stake in the restructured company.

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GM has already received about $20 billion in government loans. It could get $30 billion more to make its way through what is expected to be a two to three month reorganization in bankruptcy court.

GM car owners and potential buyers may just be reacting to the uncertainty. Or, perhaps their activity is just a very telling sign of just how slow car sales are right now. Most potential buyers at one lot in Los Gatos Sunday walked off the lot instead of driving.

Bill Ghiorso of San Jose is hoping GM's loss might be his gain.

"Your common sense would say yeah, hey bankruptcy, maybe they'll give a good deal. That's the reason I'm down here," he told ABC7.

The auto maker's looming bankruptcy filing has potential buyers like Ghiorso and millions of other GM owners asking dealers tough questions. On Sunday, the answers were already part of the car lot speech.

One salesman said that despite GM's plan to file bankruptcy, nothing about services or warrantees will change.

David Burt manages a Los Gatos dealership. He says that in March it had more sales than any other GMC, Pontiac Buick dealership in Northern California. It is one of the lucky ones. The Chevy lot next door is now empty. Where there once were 13 car dealerships in Los Gatos, there now are just three.

"We're confident that GM will be here. They will be around to service customers, to provide parts and warrantee service, and hopefully plenty of new cars as well," said Burt.

In addition to GM's own promise that it will continue to honor warranties, they also are backed by the federal government.

But, a bankruptcy could mean that GM owners have to drive farther for service if some dealerships close. As for spare parts, the company says GM models that will be discontinued share parts with models that will continue to be sold.

Greg Payne bought two GMC's within the past year. He is hoping they continue to run like new.

"GM's are built really well. It's not like something's going to break down in the near future. Knock on wood," he said.

Knock on wood is right. Analysts say it might be better to hold off on buying a GM until after the bankruptcy filing. That is because GM expects to close more than 1500 dealerships around the country. And, with those closures could come cheaper prices for buyers.

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