Obama administration offers new automaker plan

Jan. 1, 2020
WASHINGTON, D.C. — The Obama administration has announced its latest plan for the automotive industry’s restructuring. Included in the proposal is the New Warrantee Commitment Program, which ensures that consumers of new

WASHINGTON, D.C. — The Obama administration has announced its latest plan for the automotive industry’s restructuring. Included in the proposal is the New Warrantee Commitment Program, which ensures that consumers of new General Motors Corp. and Chrysler LLC vehicles will have a warranty even if GM and Chrysler fail.

The administration’s stated goals of the New Warrantee Commitment Program are to protect consumers and to help these companies emerge with a fresh start toward becoming competitive businesses without taxpayer assistance.

Specifically, the program will:
• Create a separate account that will be funded with cash contributed by the manufacturer and a loan from the U.S. government to pay for repairs covered by the manufacturer’s warranty on each new vehicle sold by a participating domestic auto manufacturer during its restructuring period. The cash contribution will be 125 percent of the costs projected by the manufacturer to satisfy anticipated claims under the warranty issued on that vehicle.
• In the event of a failure of a participating auto manufacturer, appoint a program administrator who, together with the U.S. government, will identify an auto service provider to supply warranty services.

The Automotive Service Association (ASA) is discussing the New Warrantee Commitment Program with members of Congress and the administration to determine the potential role for independent repairers.

In his public announcement, President Barack Obama also mentioned a Cash for Clunkers or fleet modernization option as part of his automotive industry plan.

“Several members of Congress have proposed an even more ambitious incentive program to increase car sales while modernizing our auto fleet,” Obama said. “Such fleet modernization programs, which provide a generous credit to consumers who turn in old, less-fuel-efficient cars and purchase cleaner cars have been successful in boosting auto sales in a number of European countries. I want to work with Congress to identify parts of the Recovery Act that could be trimmed to fund such a program, and make it retroactive starting today.”

Obama did not say whether or not he would include a repair option in his Cash for Clunkers program. ASA supports a Cash for Clunkers program if it includes these important points:
• a vehicle repair option for consumers;
• programs should be administered by the states;
• vehicle participation should be tied to emissions and improving air quality; and
• repair cost allowances should be sufficient to address emissions repairs.

ASA has written a letter to Obama asking that he consider a repair option as part of any fleet modernization program.

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