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What Are Car Owners Supposed to Do When Automakers Shut Down?
By: Matt Bubbers
Imagine the company that made your new vehicle goes bankrupt. Then what?
If it's not every driver's worst nightmare, perhaps it should be. Imagine the company that made your shiny new vehicle goes bankrupt. Then what? Here in Canada, it turns out there's very little legal recourse, consumer protection, or support available to owners of cars that have been suddenly orphaned by the death of their manufacturer.
This is not a hypothetical scenario for owners of the Fisker Ocean, a battery-powered SUV made by American upstart Fisker Inc., which declared Chapter 11 bankruptcy in June of this year. There are no official figures, but estimates from various sources suggest a few hundred Oceans likely made it onto Canadian streets before the company collapsed. Unfortunately, there is a very real possibility owners could eventually be left with nothing but an expensive paperweight in their driveways.
Fisker is not alone. High-profile EV startups including Faraday Future and Byton also flamed out recently. Long-established automakers can fail too, as Saab, Saturn, Pontiac, and so many others have proven all too well. Despite the industry's challenges, there are still plenty of upstarts with compelling new vehicles vying for your money, including Rivian, Lucid, Vinfast, and Ineos.
Buyer Beware
"When you decide to buy a new vehicle from a new brand, or even a new entrant into the Canadian marketplace, definitely that adage of 'buyer beware' comes into place," said Justin Jakubiak, a partner at Toronto-based Fogler, Rubinoff LLP who specializes in automotive and dealership law.
"While there is legislation in place for consumer protection, it really only goes so far as the company being in business. Once the company is out of business, those consumer protections are out the window," said Jakubiak. "There's potentially some support from various regulatory associations in each province […] but at a federal level, I'm not aware of any baseline protections that exist when a new or emergent car company comes to Canada and doesn't make it."
Without a manufacturer to support a vehicle, parts could become increasingly hard or even impossible to find. Warranties could become worthless. Resale values could tank. Even something as simple as losing the keyfob could render a vehicle useless if there's nobody to make a replacement. The fact modern cars are like rolling computers -- relying on special software, cloud-connected infotainment systems, and proprietary tools to work on -- only makes matters worse for potential owners.
Fisker Inc. did not respond to a request for comment. In addition, other automotive startups declined to comment on what, if any, measures they have in place to protect customers in case of bankruptcy.
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Source: What Are Car Owners Supposed to Do When Automakers Shut Down? | AutoTrader.ca
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