GM, Chrysler vehicle buyers get government warranty in Canada

Toronto, April 8 (IANS) Canada Tuesday followed the US in unveiling its own package to back warranties for vehicles sold by the sinking General Motors and Chrysler in a bid to calm buyer fears.

The government will spend about $185 million under the warranty plan for the auto sector which is the backbone of the Canadian economy and employees hundreds of thousands of people.

General Motors, Chrysler and Ford plants in Canada account for about 20 percent of their total production. Canada has already announced a bailout worth about $4 billion for GM and Chrysler.

Announcing further incentives to the sector, industry minister Tony Clement and international trade minister Stockwell Day Tuesday said that new measures will help boost consumer confidence in the auto industry. Apart from unveiling the Canadian Warranty Commitment Programme for new vehicles purchased from GM and Chrysler, the ministers also announced an additional $700-million to help auto parts suppliers also.

'By back-stopping new vehicle warranties for General Motors and Chrysler in Canada, and putting our auto suppliers on a more stable footing, our goal is to increase consumer confidence and encourage Canadians to buy new cars,'' said industry minister Tony Clement.

'These measures, along with other measures announced by our government, will help achieve a viable industry that maintains Canada's share of Canada-U.S. production going forward,' added International Trade Minister Stockwell Day.

Under the warranty plan, the government will back consumer warranties on vehicles purchased from GM or Chrysler only for a limited period as the two auto giants work on their restructuring plans. Canada's Ontario province is the hub of manufacturing for the three US auto giants. Almost 85 percent of all vehicles manufactured in Canada are sent to the US.

So deeply inter-linked are the auto sectors of the two countries that sometimes vehicle components criss-cross the border up to seven times before the new vehicle emerges from the plant.

The Canadian warranty plan follows the US warranty scheme announced by President Barack Obama March 30.

So far, Ford has not sought any help from the Canadian government.