The federal government will guarantee warranties on new cars purchased from General Motors and Chrysler, Industry Minister Tony Clement said Tuesday.

The move matches a similar warranty guarantee announced last month by the government of U.S. President Barack Obama.

"We felt this was a way to assure the buyer that if you buy a GM product or if you buy a Chrysler product, your five-year warranty for parts and labour and service will be acted upon," Clement said.

The guarantee begins Tuesday and could remain in place until restructuring by the two automakers is resolved, Clement added.

He said the maximum "downside risk" for the federal government is $185.3 million "at the absolute worst-case scenario" for covering warranties.

A separate entity will be created and funded with cash from the automakers and a loan from the federal government to pay for repairs under warranty on each new vehicle sold during the restructuring period.

Clement also said the federal government will provide $700 million in extra support to Export Development Canada to support the country's auto parts sector. The money will go to insuring accounts receivable for an auto parts supplier that is selling parts to the Detroit Three.

Amid reports that GM is moving urgently on plans for a bankruptcy filing, Clement said people should prepare themselves for that possibility.

"Both the U.S. government and myself, speaking on behalf of the Canadian government, indicated that we have to look at the whole range of options now," he said.

"Clearly, we want the restructuring plans to be approved. That is our first priority and our first option, but it's not the only option, and we have to ready ourselves for other options including Chapter 11 in the United States and CCAA bankruptcy protection here in Canada."