The announcement in June 2008 that Hummer might be sold by GM raises the excellent question. Does it make sense to buy a used Hummer? Does it make sense to buy any used vehicle from a manufacturer that is no longer in business or has switched owners? Oldsmobile would be one example of the former, while Jaguar is an example of the latter.
My answer is a qualified yes. There is absolutely no reason to automatically discount a used vehicle just because its parent company has ceased to exist or has new ownership. It is understandable why you might have concerns, chief among them, how am I going to get my car fixed if something goes wrong?
The Company Goes Out of Business
Let´s take a look at Oldsmobile, which ironically was once owned by GM, the same company that is looking to put Hummer on the auction block or shut it down outright. Oldsmobile closed its doors in 2004 after producing 35.2 million cars in its 107-year history.
That 35.2 million cars produced statistic should provide you warm comfort that there are a lot of used Oldsmobiles on the road today. There is a huge parts inventory available for Oldsmobile.
You´re also going to be helped by the fact that many Oldsmobiles were really rebadged models of other GM cars. If your mechanic can´t find the right Oldsmobile part, odds are pretty good they´re going to be able to get a matching GM part.
Plus, there is the fact that the after-market is going to be able to satisfy your needs. Many parts companies make equipment for the manufacturers. The companies are still around and have good inventories of Oldsmobile parts. You´re not going to have to resort to Hemmings News for used parts yet.
If buying a certified pre-owned Hummer, make sure GM is prepared to honor the warranty.
When You Should Be Concerned if a Company Folds
There are some instances when you should be concerned if a company has gone out of business. Own a used DeLorean or Yugo? You might have trouble finding parts to fix your ride. These companies were small to begin with and once they went out of business, there was little if any parts inventory to amount to anything.
Car companies, or Original Equipment Manufacturers [OEM] as they are commonly called, make a lot of money off replacement parts. This article from Keystone Automotive, which does have an agenda to push, says if a repair shop were to completely rebuild a car using only OEM parts, the cost would still be nearly three times the original retail price. For example, an average Ford or GM car selling for $14,000 on the showroom floor would cost more than $40,000 if purchased piece by piece using OEM parts.
The Company Changes Ownership
Company ownership change has happened recently with the sale of Jaguar, Land Rover and Aston Martin. In all three cases, the companies have purchased all the assets from Ford – that includes the parts inventories. As mentioned before, parts are big business. The new companies want that income to offset the purchase price (and Ford probably misses that revenue on its bottom line).
Where things get tricky is with certified pre-owned purchases. Read the fine print closely because terms might have changed. What might have been covered in the past might be excluded now. Don´t assume terms will not have changed.
Something else to consider is the health of the company issuing the warranty. Tata, which purchased Jaguar and Land Rover, is a financially healthy Indian company with assets to burn. Aston Martin has been purchased by an investment group. As such, the group could dump the company at any time to cut its losses or make a tidy profit. Make sure it´s clear in the paperwork who pays under new ownership.
The same scenario must also be considered in the case of Chrysler, which was purchased by Cerebrus in 2007. Before buying a Chrysler certified pre-owned, due your diligence and find out who backs the warranty when the company most likely changes hands again.
