Good news for Chrysler consumers. U.S. customers of the new Chrysler to emerge from bankruptcy will be covered by lemon law rights accordings to the agreement reached by Chrysler and Fiat. Warranty promises will be honored as originally intended.

Under most states lemon laws, a manufacturer is suppose to either buyback or replace a lemon vehicle where the consumer has given the manufacturer a reasonable opportunity to repair a major problem.

Prior to the agreement reached between Chrysler and Fiat it was unclear how consumers who had initiated claims under the lemon law would be affected by the bankruptcy. Some consumers who had requested refunds on their lemons had been issued checks that bounced because of the bankruptcy filing. After many protests by consumer groups and attorneys on behalf of consumers, Chrysler said it immediately requested and received approval from the court to honor warranties in the bankruptcy case. The court decided that all warranty and lemon law obligations will be assumed by the new company after the close of the transaction between Chrysler and Fiat.

Chrysler consumers can now rest easy knowing their warranty is safe and they will still have rights to seek a refund or replacement under the lemon law if they find they have purchased a lemon, whether it was prior to the bankruptcy, during or after.

There is a big difference between warranties and service contracts. A warranty promises to perform needed repairs on the vehicle and that it be free of defects. A service contract offers no promise of quality.

After a reasonable number of failed attempts to repair a vehicle under warranty, you should have the right to a refund or replacement (lemon law). However you could theoretically have over one hundred failed attempts to repair the same major defect under a service contract, yet still have no right to a refund or replacement.

The price of a service contract is typically based on several factors: the make and model of the vehicle; whether the vehicle is new or used; and the desired overage and length of the service contract. The cost can range from several hundred dollars to over a thousand dollars or even more.

Some people will gladly pay for extra coverage for their vehicle, just for the comfort of knowing that defects will be taken car of no matter what happens, after the manufacturer’s warranty expires. For people who keep a close eye on their budgets, service contracts make sense if they plan to put a lot of miles on their vheicles in a short period of time. In such cases the original warranty will expire much sooner, so a service contract could be worth it’s weight in gold. Otherwise, the manufacturer’s basic warranties are usually adequate.

Will General Motors File Bankruptcy? What will happen to the millions of consumers with GM warranties? Will they have recourse under the lemon law? It all may come down to whether or not GM files for Chapter 11.

Americans are waiting with baited breath to see if General Motors will file for Chapter 11 Bankruptcy on June 1, 2009, or whether their efforts to reorganize on their own can stave off the prospect of doing so. On May 21, 2009 GM reported it had reached a tentative agreement with the United Auto Workers to modify its labor contract with GM, removing a major hurdle to GM’s government-mandated restructuring. Reducing union costs are crucial for GM as it tries to shrink its debt before the restructuring deadline. To avoid bankruptcy, GM and Obama’s Auto Task Force still must reach a deal with bondholders to significantly reduce the $27 billion in debt securities owed. GM must convince its lenders (bondholders) to forgive about 90 percent of the company’s debt. GM is currently being kept afloat by $15.4 billion in government loans. Can GM make it before the June 1 deadline? Will the bondholders force GM into bankruptcy? Those are billion dollar questions. This week we should know the answer.

The “lemon law community” is still waiting to see just how the Chrysler bankruptcy is going to affect lemon law claims. There are consumers who have a legitimate lemon law claim who haven’t filed yet. There are those who have filed lemon law claims and are mid cycle, and finally those who resolved their lemon law claims and haven’t been paid.

It is wise to hold on to claims that haven’t been made yet so as not to be swept into the bankruptcy mess. By all accounts the bankruptcy process is supposed to be fast, and Fiat has a purchase agreement in place to buy Chrysler and among other things will assume specified liabilities including “certain liabilities for product warranties, product returns and rebates…”

There is a big question whether claims that are mid-stream can be resumed with the “New Chrysler.” The language of the proposed sale is ambiguous in this regard.

Just what the purchase agreement between Fiat and Chrysler means in the lemon law context remains to be seen. I think it is safe to assume that the “New Chrysler” will continue to honor Chrysler warranty claims for the driver who goes to the dealer but, one would argue that after a reasonable opportunity to repair defects, that one should be entitled to invoke the lemon law and seek a replacement or refund. The “New Chrysler” cannot have an infinite number of repair attempts while “honoring their warranty.” After all, that is what the lemon law is all about. There comes a time when enough is enough, right?

As for those who have returned their vehicle and got a bounced check in return, hope is on the horizon. There has been a lot of publicity about bounced refund checks from Chrysler, the Los Angeles Times recently wrote an article describing this fiasco. If the “New Chrysler” intends to honor its warranties, they had better honor the lemon law buy back too. They go hand in hand.

Willie Nelson, the Country Western singer from Texas, sang “Momma, don’t let your babies grow up to be cowboys.” Unfortunately there are mommas out there singing “Momma, don’t let your babies grow up to be mechanics.”

For a variety of reasons auto mechanics are not held in high regard as a profession in this country. The average car owner, when talking with his or her mechanic, is a skeptic: suspicious, fearful and ready to do violence. Or, when they find a good one they describe him or her in terms usually reserved for people who arrive on the scene in long white robes and halos. Both responses are unfair and inaccurate. These are emotional responses. Again and again the actions of a few crooked, lazy or incompetent mechanics/technicians color the character of the many.

There’s a reason for this. Joe Citizen’s reaction to his mechanic is not simply bad judgment or perversity. People react to events in direct proportion to their affect on survival. You hear a similar reaction if the bank ‘accidentally’ drops a digit. Then it’s “those dope smoking boneheads have screwed up my account again. You can’t trust banks.” It’s always they, them, those, all, etc. Note the use of generalities based on the screw-ups of the few.

How important is your car? In Los Angeles it is as important as bread. How well the car works absolutely affects quality of life, even survival itself. It shouldn’t be surprising how much emotion is vested in the condition of our cars.

That is one reason. There are others. For example, when we are ignorant about a particular subject, such as understanding how our car works, being challenged to understand things we know nothing about can evoke powerful reactions. These reactions are often irrational. Anger, fear, feelings of blankness, and despondency, these are common reactions to lack of understanding. Unfortunately our reactions are directed toward the person who places us in a position of not understanding. We look around for someone to blame. If the car owner is angry and frustrated, which is to say seriously emotional, it is predictable that too often the owner will select the wrong target.

These feelings and considerations add up to car owners saying very rude and frequently undeserved things about technicians. Having said this, let’s examine the mechanic in a modern vehicle repair environment. The first thing that comes to mind is that the mechanic’s job description has been utterly altered by the advent of technology. It isn’t just the extraordinary growth of computer-managed vehicle systems. Even purely mechanical systems in vehicles are many times more sophisticated than they were just ten years ago. A good example is the number of carmakers coming out with some form of all-wheel drive, and this is just one of many such ‘advancements.’

This is the technological environment. What about the mechanics employee/employment environment? There are so many good questions to ask. Here are a few. Are dealerships concerned about the well being of their employees? Do dealerships provide continuous and appropriate training for their mechanics? Is the widespread use of the flat rate pay system beneficial to all mechanics? What about training? It is an area where the author has considerable experience. The technological environment makes it imperative that serious efforts to train take place. Who pays for the training? What about tools? Here’s a little known fact outside of the auto technician world. Most technicians have to buy their own tools, and they ain’t cheap folks.

Finally, what if you bought a Lemon? The technician didn’t manufacture it. In our experience most lemons arrived at the dealership in that condition. All those recalls issued every year aren’t for problems caused by incompetent technicians. A few, and I mean a few cars probably have the defects they had on arrival made worse by someone working on it who either tried to get it done in the absurd hours assigned by the manufacturer for each repair task, or by a tech newly arrived from a technical school who has not yet learned to find his *&(*& without a flashlight. So I’ll say it again, we mostly sue manufacturers when they make a defective car, truck, motor home or boat that can’t be fixed. The reason we do this is because they made it, and theoretically they are supposed to stand behind their warranty instead of running like the CEO of a large manufacturer faced with an honest question.

I know a lot of master technicians. They are smart guys who talk straight and really like fixing things. They get a kick out of doing a nice piece of work that was difficult. They like winning and hate being lumped in with those who cut corners and aren’t dedicated to doing good work. So if you absolutely have to point your finger, point it in the right direction—after you cool down. And just for the record, I wouldn’t mind my sons being cowboys or auto technicians as long as they cared about doing it and don’t sing in a high, nasal voice.

www.normantaylor.com