Canada to guarantee new GM, Chrysler warranties
By David Ljunggren
OTTAWA (Reuters) - Canada will guarantee the warranties of cars sold by General Motors Corp and Chrysler under a new program announced on Tuesday to help prop up the struggling carmakers, even as Ottawa said it must be ready for their possible bankruptcy.
Late last month the government, which says a disorderly bankruptcy in the sector would cause enormous damage, rejected restructuring plans presented by both companies but announced C$4 billion ($3.2 billion) in bridge financing for them.
Warranties on new vehicles would be guaranteed by a C$185.3 million commitment program, regardless of whether Chrysler and GM go into bankruptcy protection.
The program will be funded with cash contributed by the automakers and a loan from the federal government to pay for repairs covered by the automakers' warranties on each new vehicle sold until "the period of uncertainty" ends.
The United States has already announced a similar measure.
"It will help consumers know that they have confidence when they buy a vehicle from GM and Chrysler during this uncertain period, that their warranty ... will be there for them," Industry Minister Tony Clement told a news conference.
Clement also said the government will increase by C$700 million the amount of accounts receivables insurance that Export Development Canada can offer to auto parts suppliers so they can get money owed.
He said the additional insurance support to EDC brings Ottawa's total exposure to auto parts suppliers to C$1.25 billion, which is about 20 percent of the $5 billion auto supplier support program announced by the U.S. government on March 19, and proportional to Canada's share of the North American auto market. Continued...