Automakers are trying everything they can to combat rampant flipping and reselling of high-demand models. Now, General Motors is taking the fight to those who decide to buy their popular car from a flipper. In a letter sent to dealers signed by Steve Carlisle, president of GM North America, the automaker says “certain warranties will not be transferrable” on Corvette Z06, Escalade-V, or GMC Hummer EV models that are re-sold less than one year after original sale.
The letter was first spotted on social media (thanks, Zerin!). Jalopnik contacted a General Motors spokesperson, who provided the full text of the letter (which you can read below) and confirmed that the letter was sent to U.S. dealers.
The long and short of it is this: GM is “limiting the transferability of certain warranties” on those three models “if the vehicle is resold within the first 12 months of ownership.” The automaker says it’s pursuing this action because “when vehicles are quickly resold, particularly by unauthorized dealers or other resellers that do not adhere to GM’s standards, the customer experience suffers and GM’s brands are damaged.” The letter also points out that “these changes will not impact product recalls in any way,” and says the action will “help prioritize ownership by brand enthusiasts and loyal customers.”
A GM spokesperson gave the following details to Jalopnik:
For Corvette Z06 and Escalade-V, if ownership of the vehicle is transferred from the original owner within the first 12 months of delivery, the Bumper-to-Bumper, Powertrain, Sheet Metal, Tire and Accessory coverages will be voided.
For HUMMER EV, if ownership of the vehicle is transferred from the original owner within the first 12 months of delivery, the Bumper-to-Bumper, Electric Vehicle Propulsion, Sheet Metal, Tire and Accessory coverages under GM’s New Vehicle Limited Warranty will be voided. The Battery Warranty Coverage will not be affected for HUMMER EV.
Flipping, brokering and reselling are a major issue with seemingly every high-demand enthusiast model on the market today. Automakers have limited opportunities to combat this practice, in large part because of how U.S. new-car sales work: Independently-owned dealerships are the customers who buy the cars wholesale from the automakers, then sell them at retail to customers.
Since the automakers don’t control the dealers, there’s little an OEM can do to prevent a dealership from adding markup to a car, or playing games with selling a hot new vehicle as “used” for whatever price the market will bear. And even a dealer can’t control what an individual customer decides to do with their car, including flipping it for a profit the moment the dealership sale goes through.
Of course, the person penalized the most by GM’s new policy is the buyer who gets the car from a flipper or broker. That buyer might not even know about GM’s warranty policy until they need to bring their Z06, Escalade-V or Hummer in for warranty work, only to find their warranty has been denied. Jalopnik has reached out to GM for clarification on which warranty coverage is affected by this policy, and whether the automaker plans to publicize this new decision to make sure potential private-market customers know what they’re getting into.
A GM representative gave the following explanation to Jalopnik:
The person who attempts to flip one of these high demand vehicles by selling it during their first year of ownership is prohibited from placing future sold orders for certain high demand products (identified by GM). So there is significant risk to the flipper’s future ability to buy, in addition to providing an incentive for a customer to buy new and receive a warranty rather than buy from a flipper.
Do you think this policy will stop people from buying hot GM models at a markup on the private market? Let us know in the comments below.
Dear GM Dealership Team,
We are continuing to build momentum as we head into the second half of the year and have started shipments of several of our high demand and limited production products.
This letter serves as a follow-up to my communication from January of this year, where we reiterated your contractual requirements and our policies on selling new vehicles for resale. When vehicles are quickly resold, particularly by unauthorized dealers or other resellers that do not adhere to GM’s standards, the customer experience suffers and GM’s brands are damaged. As a result, on certain high demand enthusiast products, we are limiting the transferability of certain warranties and barring the seller from placing future sold orders or reservations for certain high demand models (as identified by GM) if the vehicle is resold within the first 12 months of ownership. These changes are being implemented to ensure an exemplary customer experience, to ensure our brands remain strong, and to help prioritize ownership by brand enthusiasts and loyal customers. These changes will not impact product recalls in any way.
Currently, the products impacted by these changes include the following: 23MY Cadillac Escalade-V, Chevrolet Corvette Z06, and GMC HUMMER EV (SUT and SUV). Certain warranties will not be transferrable if the original owner resells the vehicle within one year of delivery.
In the coming days, you will receive a message from your respective brands that will outline full details of the warranties and the customer acknowledgement requirements to implement this new process. Thank you in advance for continuing to do your part in ensuring our customers have great experiences when purchasing these truly special products.
If you have any questions or comments, please reach out to your Zone Manager.
President GM North America