Bailout to Produce More Orphan Brands - Car News

Blame Charles Dickens. He gave orphans a bad name. Like Pip in Great Expectations, or Oliver Twist in, well, Oliver Twist, Dickens made being an orphan seem like such a unfortunate thing. Which, of course, it is if you’re a human. But what if you’re a car or a truck?

That’s one of many questions churning around Detroit, and by extension, potential customers of Detroit’s products. With Ford, General Motors, and Chrysler all standing before the U.S. Congress with their hands, and their lower lips, stuck out?“ Please, sir, may I have some more?” ? the possibility of one or more car brands ceasing to exist in the next five years is nearly a certainty.

How bad is owning an orphan, really?

In one sense, it doesn’t appear to be a big problem. We priced four vehicles on Kelley Blue Book , two of which are orphans and two of which came from brands that are still around. Our sample included a 2004 Oldsmobile Alero and a 2004 Pontiac Grand Am with identical equipment and miles, in theoretically excellent condition. We also priced a 2000 Plymouth Neon and a 2000 Dodge Neon. The Alero and Grand Am were mechanical twins, and retailed for roughly the same price. The Neons are essentially the same product with a different badge. The idea was to determine if the orphan status of the Oldsmobile and Plymouth torpedoed resale value.

It didn’t. The Alero would retail now for $8700, the Grand Am for $8965, just $265 more. Spread out over six model years, you’d be taking a hit of about $44 a year for the Oldsmobile’s orphan-ness.

As for the Neon twins, they have twin prices, too: $3185. Kelley makes no distinction for the fact that Dodge still exists, while Plymouth is long gone.

These numbers would likely be different had we done this comparison on vehicles that were just two or three years old, as the disadvantage of being an orphan tends to lessen by comparison as the years pass. Bottom line: If you plan to hang onto your vehicle until it’s paid off, it’s likely you won’t suffer much in resale. As far as warranty, parts, and service go, Oldsmobile and Plymouth owners will likely tell you that other Chrysler and General Motors dealers have had little problem in handling their needs. Because the companies that made the orphan cars are still around, they are obligated to honor those cars’ warranties, and rampant platform sharing these past two decades means doing so is easy. With sales in such a sad state, many dealers are reawakening to the profit potential of the dealership’s “back end,” which is where service customers usually enter. (And in some cases, it’s the other way around. Sorry.)

Orphans like Plymouth and Oldsmobile, though, still had some surviving relatives. Likely customers of Daewoo and Daihatsu, respectively the Korean and Japanese brands that completely ceased operations in the U.S., will have some sad stories. They lost dealer, parts, and warranty support. Your only recourse if you have been completely abandoned is junkyards, aftermarket suppliers, and private garages, although some dealers that stayed in business selling other brands at least tried to take care of their old customers.

Bottom line: If parts of Ford, General Motors, and Chrysler survive, we wouldn’t worry much about buying a vehicle that could be orphaned. Those companies are obligated to stand behind their products as long as they are in business. But if any of them enter bankruptcy or disappear completely, all bets are off

And even then, the average price of the used Edsels listed in the December issue of Hemmings Motor News is $23,625. Even Oliver Twist could appreciate that.