GM Warns Dealers About Penalties For Taking Advantage Of Demand

GM could initiate policies that affect vehicle warranty transfers and dealer vehicle allocations.

By: Steven Loveday

Aug 2, 2022 at 8:47am ET

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General Motors sent out a second message to its dealers in an attempt to curb potential behavior related to multiple high-demand vehicles, including the GMC Hummer EV. Basically, the automaker is making its expectation very clear to its dealers and providing a warning about what the consequences may look like for dealers who don't comply.

GM explained to dealers that they can't simply involve third-party dealers, brokers, or resellers in an effort to work around the automaker's markup restrictions. The company had already mentioned that dealers abusing the system may lose their future allocation of vehicles. Now, GM has reiterated the earlier threat and added that it could make vehicle warranties non-transferrable if a dealer helps facilitate a resale of a vehicle like the Hummer EV inside of the first year.

Sadly, dealer practices such as high markups and flipping vehicles hurt the customer the most, and GM's potential warranty policy could impact buyers negatively. It may not even be a buyer's fault, and they could end up paying big money for a vehicle with a warranty they can't use.

As we've noted a few times recently, automakers like GM and Ford don't really have control over their dealers. For the most part, they can't tell them how to operate. However, if dealer decisions are making a negative impact on customers, it only makes sense for the automaker to get involved, not only to protect the brand's image, but also to make sure customers aren't lost.

A portion of the letter to details from President of GM North America Steve Carlisle reads:

"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."

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Despite the letter to dealers, it's not crystal clear how the new policies are going to play out. Moreover, we don't know how the automaker intends to enforce them. According to Autoblog, GM will provide more details next week.

The letter explains that GM will be reaching out to dealers in the coming days to provide more specific details about the policies. The letter also says that it will provide dealers with the information related to the "customer acknowledgment requirements to implement this new process." Finally, the automaker notes that the changes will not affect vehicle recalls. To see the letter in its entirety, follow the source link below.