Following the collapse of MG Rover, Irish customers could be left facing repair bills normally covered under the company's three-year warranty scheme.
MG Rover dealers have been told by the company's administrators, PricewaterhouseCoopers (PwC), that there are no funds available to honour warranty claims.
In a statement PricewaterhouseCoopers said: "We're aware that historically MG Rover has reimbursed repairers and authorised dealers the cost of valid claims. However, following our appointment as joint administrators, the company no longer has sufficient funds to reimburse warranties."
The only advice the administrators could offer was for the 3,000 Irish MG Rover customers with cars under warranty to contact their dealers. "The situation is the same in Ireland as it is in Britain, the company does not have the funds to reimburse dealers for warranty claims," said Rob Hunt, joint administrator and partner with PwC.
"In the first instance, concerned Irish MG Rover customers should contact their dealer to discuss the options open to them." Such options would include purchasing additional warranty cover from a third-party source.
On Monday afternoon PwC was appointed administrator to MG Rover Ireland, the importer and distributor of the company's cars in the Republic. The appointment of the administrator here has put 12 jobs in jeopardy at MG Rover's head office, as well as leading to uncertainty over the future of 21 Irish dealerships.
The collapse of the company has also left 5,000 people without jobs and 18,000 unsold new cars at the Longbridge plant in England.
There is some good news for Irish MG Rover customers. Under consumer protection laws, those who have bought new cars recently can demand that all warranty work is carried out free of charge by their local MG Rover dealer until their car reaches 12 months of age. However, since 2002, MG Rover has been selling all of its new cars with a three-year warranty package. It is payment for work carried out during this extended period that will now not be honoured by MG Rover.
Many MG Rover dealers here have said they would honour warranty claims. Several who spoke to The Irish Times have criticised MG Rover Ireland for failing to advise them on how to handle such claims. Dealers are confused as to the approach they are now meant to take. However, Gus Corrigan, managing director of MG Rover, said that only the administrator could now officially discuss the situation with the dealers.
"We have had no communication from MG Rover Ireland," said a spokesperson for Trinity Motors in Wexford. "We are still waiting to hear what the situation is in regard to warranty work, but at present we will continue to carry out such work."
Kildare MG Rover dealer Tom Waters also said he would continue to honour warranties, for the time being. "We will still honour our warranty agreements until we know exactly what is happening," he said.
Thomas Brady, dealer principal at Brady's of Cavan, said that until he hears from MG Rover Ireland, he will stop trading in MG Rover cars: "We've had no advice yet from MG Rover Ireland and until we do we're not going to sell any more Rovers."
Dealers can only continue to sell new MG Rover cars if the cars have already been paid for by the dealer or if they have been bought under a dealer finance scheme.
It's unclear how many unsold MG Rover cars remain in Ireland. The advice to customers who have paid deposits and are concerned about delivery is to seek their deposits back from their dealer.
Some Irish MG Rover dealers have stopped selling new cars, but in Britain dealers have begun slashing the price of existing stock. One Bristol dealer has reportedly cut over €10,250 (£7,000) off a new Rover 75 and is offering three-years' warranty cover for an additional €660 (£450).
Such deals are not yet available in Ireland, although dealers have started cutting prices of second-hand MGs and Rovers. It's too early to estimate the long-term impact on Irish used car prices for Rovers, but one industry source estimated a fall of between 15 to 20 per cent here.
Customers of older MGs and Rovers have been reassured that they will still be able to obtain spare parts. Since July 2004, the supply of MG and Rover parts has been handled by Caterpillar Logistics Services.
Caterpillar bought the car-maker's parts business for just over €150 million last summer and has confirmed that the demise of MG Rover will not affect its operations.
Land Rover, which was sold to Ford and became part of the US car-maker's Premier Automotive Group in June 2000, has also said its customers should not be concerned. David Harpur, managing director of Land Rover Ireland, reassured his customers, saying: "There is no link at all between MG Rover and Land Rover. The two companies have been separate for five years."
The death of Britain's last mainstream car-maker comes five years after it was sold by BMW for just £10 to a consortium of businessmen. However, the new company, Phoenix Venture Holdings, which produced the full range of MGs and Rovers has been losing money for some time.
With mounting losses and an ageing model range, the crisis at the company grew. Earlier this year it was hoped that a deal with a Chinese car manufacturer, Shanghai Automotive Industry Corporation, would save MG Rover. However, the deal fell through despite behind the scenes negotiations involving British Chancellor Gordon Brown. There are hopes that a deal may still be struck, although these are now fading.