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No need for potential buyers to shy away from discontinued models - May 09, 2009
Dealers and carmakers must support vehicles with after-sales service, warranties and parts
General Motors recently announced plans to close its Pontiac, Hummer, Saab and Saturn divisions. This decision will affect dozens of models in all vehicle categories over the next few years.
While it's rare for an entire automobile division to be closed down, it's not uncommon for automakers to discontinue specific models.
Should the discontinuation of specific models deter consumers interested in purchasing those vehicles? No, absolutely not.
Automobile manufacturers and dealership networks are fully committed (and obligated) to supporting their entire lineups of cars and light trucks.
If a vehicle is slated to be discontinued, the manufacturer and the dealership will stand behind the vehicle before and after it's sold.
Discontinued models are still required to meet all government, safety and emission standards, and manufacturers are still required to issue safety recall notices and service repair bulletins, if applicable.
Manufacturers are also required to fulfill all standard warranty obligations on discontinued models.
Some have wondered about the availability of parts for discontinued vehicles.
Manufacturers are required by law to stock parts to cover the warranty periods on all of their respective vehicles, including extended warranty coverage.
Dealerships can usually obtain parts from the manufacturer for 10 years after a model has been discontinued. After 10 years, the manufacturer may still carry parts; it depends on the popularity of the model.
Many car parts built by the same automaker are actually interchangeable among similar models.
For instance, hard parts (brake pads, rotors, air filters) for a Pontiac Pursuit can be installed on a Chevrolet Cobalt, and vice versa.
If a dealership stops carrying parts for an older, discontinued model, then an aftermarket parts supplier will probably carry the parts in stock.
Failing that, consumers can obtain parts from online suppliers and auctions.
How does the closing of an automobile division or model affect pricing? New-car prices are determined by many factors, including a manufacturer's investment of capital and materials, cost of labour, finance rates, and, of course, supply and demand.
If there is strong demand and limited supply of a particular vehicle, it stands to reason that the selling price would be slightly higher than that of a vehicle that is overstocked and generates little interest.
In the case of a discontinued nameplate or model, manufacturers and dealerships often apply attractive financial incentives to those vehicles. A discontinued model could even offer consumers a favourable negotiating position.
What about resale value? Should a discontinued model's resale value be factored into a car-buying decision? Yes, resale values should always be factored into car-buying decisions.
If you plan on keeping a discontinued model for many years and driving it for hundreds of thousands of kilometres, then you probably needn't worry about its resale value.
But if you plan on selling or trading in your vehicle after three to five years, its resale value might be worth a second look.
Resale values of new automobiles are determined by the quality of the vehicle, the appeal of the brand, and basic supply and demand.
There is always a chance that today's discontinued model could move into "collector" or even "antique" status one day. When an older vehicle is restored to its original condition, its value can rise significantly.
Nobody can predict with certainty what the resale value will be on a particular vehicle. All new vehicles eventually depreciate in value; some depreciate less than others.
Bottom line here is that consumers shouldn't shy away from purchasing discontinued models.
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