What Should I Do About My Car's Warranty If My Dealership or Automaker Closes?

After buying a new car under warranty, you may discover the dealership is closing. The manufacturer’s warranty still covers most buyers. However, any warranties with the individual dealership could be at risk. Understand your vehicle warranty to make sure you’re covered.

If the dealership isn’t honoring your warranty, take action to avoid getting ripped off. Don’t get an extended warranty or service contract from a closing dealership. Talk to a consumer warranty lawyer to learn about your legal options when a dealership closes shop.

Understanding Your Car Warranty

A car warranty is a promise to cover repairs or replacements in a vehicle. Most new vehicles come with a manufacturer’s warranty. The factory warranty covers certain components for a period of time or a number of miles. Most new car warranties don’t cover routine maintenance, like oil changes and tire rotations.

There are different types of auto warranty coverage. It depends on the vehicle and the automaker, including:

• Drivetrain or powertrain warranty
• Bumper-to-bumper warranty
• Emissions warranty
• Corrosion or perforation warranty

Some used cars, including certified pre-owned vehicles, also come with a manufacturer warranty. Different car manufacturers have different warranty terms. For example, the drivetrain warranty for a Ford can differ from that of a Toyota. Check your vehicle’s warranty to understand what it covers and for how long.

The car dealership can offer other warranties beyond the factory warranty. These may be small incentives to get you to buy the vehicle from their dealership. The salesperson may offer roadside assistance, towing, and a rental car for covered mechanical breakdowns. Car dealer warranties generally don’t transfer after the dealership closes.

Extended Warranties and Vehicle Service Contracts

Extended warranties generally refer to vehicle service contracts. Typically, the dealership will try to sell these add-on options. The dealership or a warranty company can provide an extended car warranty. The warranty covers a period after the end of the factory warranty.

Extended warranty coverage varies widely. If you think you may want an extended warranty, make sure you review the coverage and cost closely.

If you get a robocall or text message telling you your vehicle warranty is about to expire, it’s almost always a scam. This isn’t a real warranty—scammers use the threat of high repair costs to get your money. Hang up and don’t give them any information.

Steps To Take When Your Dealership Closes

The automaker provides the manufacturer’s warranty. You can generally get warranty-covered repairs from any authorized dealership, even if you bought it from another dealer. For example, if you buy a new Honda in California and it breaks down in Texas, you can take your car to an authorized Honda dealership in Texas.

If your dealership is closing, you may lose any warranty agreement made between you and the dealer. If the dealership dissolves, no one is left to cover the warranty. However, a warranty agreement with a warranty company may continue even after the dealership closes down. Review any warranties and service contracts to see who owns and services those contracts.

Warranty Transfers

A warranty transfer carries the vehicle warranty coverage to a new buyer. If you buy a new Jeep with a five-year powertrain warranty and sell it after three years, the new buyer generally keeps the remaining warranty. The transfer is often automatic when you transfer the title. The factory warranty is connected to the vehicle and vehicle identification number (VIN).

Getting Service After the Dealership Closes

You can check with the salesperson or dealership before they close to find out about the nearest certified dealers. If you live in a big city, another certified dealership may be close by. If you live in a rural area, the closest dealership may be much further away.

If you no longer have warranty coverage, you’ll have to pay for repairs out of pocket. Most repair shops can handle routine maintenance and common repairs. However, some repairs may need a mechanic with experience handling those types of vehicles. Check with your vehicle manufacturer for a certified mechanic in your area.

Legal Recourse and Consumer Rights

If you bought an extended warranty and the dealership isn’t covering the repairs, you can take legal action. First, try to contact the dealership or your service contract company to get them to cover the repairs. If you can’t get any help, report consumer protection complaints to your state attorney general’s office. You can also report fraud to the Federal Trade Commission (FTC) at reportFraud.ftc.gov.

How a Lawyer Can Help

If you have unpaid claims covered by the closing dealership, you can file a lawsuit to recover damages. However, the dealership may already be facing multiple legal claims. It’s difficult to recover financial compensation from a closing company. Talk to your vehicle warranty protection lawyer to find out about your legal options to hold the dealership accountable.