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Is The RV Dealer Responsible For Warranty When The Manufacturer Goes Bankrupt?

by anonymous

QUESTION: is the RV dealer responsible for warranty when the manufacturer goes bankrupt.

Thanks for asking your question on the Ask An RV Question page.

ANSWER: There are different types of bankruptcies, in some bankruptcies the company is reorganized and certain debts are either forgiven or a payment plan is put into place so that the manufacturers can continue operating. In the case of this type of bankruptcy the manufacturer is most likely going to be required to honor the warranty, which means the dealership can perform the work.

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Now let's say that the manufacturer files for bankruptcy and closes its doors permanently, in other words, they are liquidating the company and selling off all of the assets of the company to settle their outstanding debts.

In this case there is a simple answer to this question, NO. Once an RV Manufacturer closes permanently, the dealer that sold you the RV is no longer legally required to honor the warranty.

The reason is that when an RV dealer performs approved warranty work on an RV, they are reimbursed by the RV Manufacturer for that work.

If the manufacturer is no longer in business, they cannot approve or reimburse the dealer for the cost of the warranty repairs.

The minute the manufacturer goes out of business the RV becomes what is known as an “Orphan”; you would then be responsible for paying for all repairs out of your pocket.

Remember, the RV Dealer sold you the RV; they did not build the RV. That being said, there have been some RV Dealers that have stepped up and performed warranty work on "Orphaned" RVs and not charged the customer for the repairs. In other words they eat the cost themselves.

Why to these dealers do this? Because, they truly believe in good customer relations. They hope that by doing this for you;
that you will return to them the next time you are in the market for an RV or refer people that are looking for an RV to their dealership.

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As a new RV buyer you will run across quite a few of these new Orphaned RVs for sale. They are brand new and being sold at "Rock Bottom" prices. You will get quite a bit more RV for the money you spend.

Some dealers will tell you that they will provide you with a warranty for the RV, if you buy it. This is where you have to careful. If the dealer is talking about an "Extended Warranty" then you have to be aware that an "Extended Warranty" does not cover all of the items that a “New RV Warranty” does.

Other dealers will actually commit to cover all of the repairs that the manufacturers New RV Warranty would have covered, had they still been in business.

If you decide that you want one of these Orphaned RVs, make sure you get everything in writing as to what will or will not be covered. This way there is no misunderstanding between you and the dealer when something does go wrong.

Keep in mind, that regardless of how well built an RV is, there will be items in the first 12 months that will have to be repaired, that is just the way it is.

I hope that this has answered your question.

If you want to know which RV Manufacturers have gone out of business in the last couple of years we have a listing here: What RV Manufacturers are out of business?.

I am sure that some of our visitors will have other information they would like to share. If they do they can click on the comment link below.

Thanks again for your question and Happy RVing.

RVing Al

Comments for Is The RV Dealer Responsible For Warranty When The Manufacturer Goes Bankrupt?

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Waiting on the word from the Dealer
by: Melissa

We haven't had our Rv a month yet or made the first payment. I was just at the dealership on Friday with a list of complaints about the RV and we tried to call the company and the rep to no avail.

I found out last night when I signed up with the 90 day travel group they gave us online access to, that Evergreen CLOSED THEIR DOORS ON THE 10th and are preparing their equipment for AUCTION!!!!

I AM SICK to say the LEAST! Our warranty is worthless. SO we have a new note and a possible LIABILTY on our hands now?!

Hoping the dealer comes through here or this is about to get VERY UGLY.

2017 EVERGREEN Bayview Select Suite

Note From RVing Al: I am very sorry that this happened to you. I also hate to be the bearer of bad news, but the dealership that sold you the 5th Wheel has no legal responsibility to do warranty work on a new RV. It is always the responsibility of the manufacturer of the RV to approve and reimburse the dealership for any work performed.

The only thing you can hope for is that the dealership does some repairs on your 5th Wheel as a good will gesture, but legally they are not required to.

Just a note here, Evergreen's shut down was sudden as I understand it they lost one of their financial backers. The only good news in this whole matter is that Evergreen was known for making a very good quality RV.

Be careful with dealers
by: Anonymous

Recently purchased a new travel trailer from Stone's Camping World in New Jersey. Manufacturer is KZ Industries. Used the unit one time and discovered a defective tire. Brought it to the dealer who said I had to deal directly with the manufacturer.

The dealer effectively washed its' hands of the entire matter. I realize that defective tires are the responsibility of the manufacturer, but the attitude of the dealer was disgraceful.

Dealing with the manufacturer involves paper work and having the tire shipped UPS across the country. Then they'll send me a check if the tire is defective. I won't hold my breathe.

The real fear is that all the tires are defective. In the mean time I will purchase a new tire at my cost and hope the others hold up. I have been an RVer for 25 years so this is not a surprise. But I have found dealers to be an unscrupulous lot, so be careful.

by: Anonymous

I understand if the company is out of business you must pay for repairs. I am wondering if the dealer's shop is responsible to be sure the warranty is in effect before doing any repairs? Or can they just say "Oh well" now you have to pay.

ANSWER Normally an RV Dealer has to contact the RV Manufacturer to get prior approval to perform the warranty work. Do all dealers do that, probably not depending on their working relationship with the manufacturer.

Can the RV Dealer come after you for the cost of the warranty repairs if the manufacturer does not cover it, yes they can as they sold you the RV they did not manufacture it. You could sue them if you feel that they did not use due diligence to verify the warranty. But the cost of retaining an attorney and suing the dealer may be more than what the repairs cost.

RVing Al

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