Consumer Newsbrief – Cars From Bankrupt Manufacturers, The Digital TV Transition

Liz Crenshaw:6/2/09

So you want to buy a car from a bankrupt car manufacturer.  Liz Crenshaw has some tips before you make the deal.  And the switch to digital TV is only days away. The Secretary of Commerce tells Liz how analog TV viewers can keep the programs coming. 

Let's start with cars tonight.  Is it a good idea to buy a new car from a bankrupt car manufacturer? A recent Consumers Reports survey found 78-percent of respondents said they were unlikey to consider a car from a bankrupt automaker.

But Consumer reports says most car buyers won't experience any significant effect because of bankruptcy. Automakers will continue to support discontinued models with warranties, parts, and service. So here are the good reasons to buy a new car. First, the deal is likely to be exceptional.  That's because of sales incentives including rebates, discounts, and special financing.

The average incentive on a GM vehicle had been $4200, Experts predict incentives could reach $6500 or more because of GM's bankruptcy filing.  And don't worry about warranties, the Federal Government will back Chrysler and GM warranties.

But there are downsides to consider too.  Resale value on discontinued cars is likely to drop dramatically. The residual value of a 3-year old GM vehicle is about 58-percent of its original cost, and that could drop by 10-points.  The residual value of a Chrysler vehicle is about 30-percent.

Then there's service, you may have to travel farther to find a GM or Chrysler dealer to service your car.  So it may be easier to find an independent mechanic for service.  And getting parts could be a bit more difficult because some parts suppliers will fail because of GM and Chrysler bankruptcies.

And understand the great deals are not expected to last. The over-supply of vehicles is likely to diminish as production shrinks, and an improving economy will eventually increase demand, meaning car prices will rise and some models will be harder to find.

Now the digital TV transition.  Are you ready for it? June 12th is the date of the changeover, so if you get your TV programs through an antenna or rabbit ears, they will disappear on that day.  The solution is a converter box.  Yesterday, Secretary of Commerce Gary Locke told me his deparment is making the purchase of converter boxes as easy as possible. 

Gary Locke, Secretary of Commerce
We in the Department of Commerce are giving out free coupons. Two coupons per household worth $40 each. And all you have to do is call 1-888-DTV-2009. We'll send you the coupons within a matter of days in time for you to run down to your Walmart, your Target or Radio Shack. Get a basic model. $40 each is the basic model. That's all you need. So the coupons really make these converter boxes for free.

That number again is 1-888-DTV-2009.  This is how to get your converter box coupons quickly, and we'll have more about the DTV transition this Thursday. 

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