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RVDA: What to do when an OEM goes under

RVDA: What to do when an OEM goes under

FAIRFAX, Va. — EverGreen RV has confirmed reports from dealers and the media that it suspended operations this month, creating challenges for dealers who have new products in inventory or who sold its units in the past, the RV Dealers Association noted today.

RVDA offers the following information on how dealers can handle sales of existing units, warranty obligations, financing, and other issues when a manufacturer goes under.

Unfortunately, when manufacturers cease production, dealers can find themselves owed tens of thousands of dollars from manufacturers for warranty reimbursements and incentives that become virtually uncollectible once the manufacturer ceases operations.

RVDA suggests the following:

  • Discuss with your dealership’s attorney the possibility of titling the manufacturer’s units in your dealership’s name and selling them used with a limited express warranty, or “as is.”
  • Ask your service agreement provider if it provides/sells extended protection for out-of-business manufacturers’ units.  For instance, Protective’s XtraRide offers a 12-month service agreement should the manufacturer’s warranty be unavailable.  Dealers may also sell the customer a longer term service agreement in addition to the 12-month term.  XtraRide is exclusively endorsed by RVDA.
  • In some states, it may be illegal to sell a new vehicle without a warranty or to sell a vehicle as new if the manufacturer is no longer licensed to do business in the state.
  • If you sell the vehicle as new, you must fully disclose the manufacturer’s inability to pay for warranty work, on the vehicle and on the bill of sale.
  • Review contracts with consumers who bought units to see if you assume responsibility for the warranty work. In some cases, paperwork may indicate that the only warranty is the manufacturer’s warranty, and only the manufacturer is responsible for warranty work.
  • Have consumers who bring EverGreen units in for repairs sign a disclaimer acknowledging that if the dealership attempts a good-faith repair of any alleged defects, the dealership is not assuming any express or implied warranties provided by the manufacturer.
  • Check with lenders on financing options.  In the recent past, some lenders have told dealers they will not accept financing requests for new or used units built by manufacturers who had gone out of business.
  • If a bankruptcy reorganization turns into a liquidation, discuss with your attorney whether your good faith effort to repair a customer’s warranty issue, without seeking reimbursement, is inconsistent with your disclaimer of implied warranties, and whether you may be obligated for additional repairs.

RVDA will provide additional details on the EverGreen situation as they become available, the association explained.

SOURCE: RV Dealers Association bulletin

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About Greg Gerber

Greg Gerber is a freelance writer and podcaster who has been writing about the RV industry since 2000. He is the former editor of RV Daily Report.

One comment

  1. Good information. So can consumers expect to see deep discounts on these units?

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