Canada to underwrite auto warranties

OTTAWA, April 8 (UPI) -- The Canadian government is putting up $185.3 million to back warranties of new Chrysler and General Motors vehicles in case the companies go bankrupt.

Industry Minister Tony Clement announced in Ottawa the fund would back vehicles sold after Tuesday and last throughout the troubled companies' restructuring period, Sun Media reported.

He said the new Canadian Warranty Commitment Program was a bid to bolster consumer confidence.

"It will help consumers know that when they ... buy a vehicle from GM and Chrysler during this uncertainty period their warranty will be effective," Clement said.

Clement also announced up to $700 million was allocated to an insurance program for some 650 auto parts suppliers to protect them if either GM or Chrysler goes bankrupt, The Globe and Mail reported.

The suppliers can opt to pay a premium of 0.75 percent of the value of sales to the two companies. If either carmaker folds, the government would then pay the full value owed to the supplier, Clement said.