Dealers that have provided extended-service warranties to their customers through Automotive Professionals Inc. (API) may be headed for tough days ahead.

Several dealers are being told by their API sales representatives the firm’s extended warranties sold to customers are no longer being honored, Ward’s has learned. For now, dealers are either swallowing repair costs themselves or turning away angry customers.

API is not commenting on the situation, but sent a letter to its dealers, agents and underwriters a week ago saying it was going through liquidation.

Calls to API’s main office are answered by a voicemail directing dealers to call another number, which takes them to another voicemail asking they leave a message. Dealers say the calls are not being returned.

Representatives at API’s call center, responding to questions regarding a specific contract, claim API is no longer managing the contract. One representative claims the contract is being handled by Marathon Financial Insurance, an underwriter for many of API’s service contracts.

A Marathon representative only would say the firm is not managing any of the service contracts and that attorneys are working with API’s liquidators.

Dealers are being told conflicting information. A service director for a Massachusetts Ford dealer says he was told all of the contracts underwritten by Marathon are worthless because the underwriter went “belly up.” The Marathon representative denies this.

As late as November, API ads touted First Colonial Insurance and North Brook Indemnity Co. as underwriters of its service contracts.

Dealers say they are frustrated by the situation. “You can’t believe some of the answers we’re getting from people at API,” the Massachusetts dealership service director says.

The worst-case scenario is that API goes out of business leaving its dealers to fend for themselves.

“We wrote $30,000 in contracts with API last quarter,” the service director says. “We’re a Ford dealership, and that’s not something we can absorb right now.”

cbanks@wardsauto.com