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How MG Rover’s crisis affects you

15 April 2005

MG Rover owners and buyers continue to face uncertainty over warranties, new car prices and residual values as the death of the British manufacturer now looks all but inevitable

CityRover

MG Rover owners and buyers continue to face uncertainty over warranties, new car prices and residual values as the death of the British manufacturer now looks all but inevitable.

MG Rover warranties are now worthless as dealers will no longer be reimbursed for the work they do.

However, owners do have separate statutory rights to have faults repaired by dealers under the Sale of Goods Act. This allows owners to argue their car is not of ‘satisfactory quality’ or ‘fit for purpose’ if faults arise, and that the car should be put right for free as a result.

Which faults can be accepted under these definitions are not made clear by the act, however. Dealers may argue against owners’ claims as a result, particularly as they are now responsible for the cost of these repairs.

Claims could then be pursued through a small-claims court where owners would have to show that other ‘reasonable’ members of the public would agree the faults were unacceptable and should be put right.

If the dealership from which you bought your car goes bust, you will even lose these rights.

Third-party warranties from providers such as Warranty Direct could pay for repairs, but three years of cover would cost owners several hundred pounds.

Spare parts should remain widely available, while independent garages could do servicing and repair work if franchised dealers are forced to close or switch brands.

Dealers will have no choice but to slash prices of current stock. Some franchises, including those run by the Pendragon group, bulk-bought sizeable numbers of cars with extra margins already included, so these outlets will be able to offer discounts of up to 20% and more.

New prices could tumble further if and when PricewaterhouseCoopers calls it a day on the company and starts to sell stock that has not already been sent to dealers. The administrators have not said how many cars it has on the books, when it might start to sell them or at what price.

If you are determined to buy an MG Rover, bear in mind that you might have to fork out for an independent warranty, so factor this into negotiations. If you are offered a third-party warranty by a dealer hoping to get rid of his stock look through it carefully.

Used car values are also sure to take a hit, but the value the market will place on cars is still uncertain. Don’t panic and rush into selling your car, however, especially to canny dealers looking to capitalise on the grim news surrounding MG Rover.

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