GM cracks down on EV and sports car flipping with controversial new policy
GM is discouraging sellers from flipping in-demand modelsBy Shawn Knight 9 comments
In brief: Covid-induced production delays and resulting component shortages directly contributed to the huge mess that the video game hardware industry is just now starting to recover from. As it turns out, the automotive industry is going through a similar crisis – one that GM thinks it may have just solved with a controversial new policy.
In a letter recently sent to US dealers, GM North American President Steve Carlisle outlined changes impacting three high demand products: the 2023 GMC Hummer EV, the 2023 Cadillac Escalade-V and the 2023 Chevrolet Corvette Z06.
GM will limit the transferability of warranties on these models if the original owner resells the vehicle within the first 12 months of ownership. Specifically with the Corvette and Escalade, the bumper-to-bumper, powertrain, sheet metal, tire, and accessory coverages will be voided. On the Hummer EV, the bumper-to-bumper, electric vehicle propulsion, sheet metal, tire, and accessory coverages under GM's warranty will also be null and void if resold within the first year.
The Hummer EV's battery warranty is not affected, and the changes will not impact product recalls, we're told.
Furthermore, the seller will be prohibited from placing future orders for certain high-demand GM products.
"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," said Carlisle.
In short, GM has designed the policy to deter people from buying an in demand model from a private party (who wants a new vehicle without a warranty?) and to discourage sellers from getting on GM's naughty list (who wants to be banned from reserving a future vehicle you may really want?).
We also don't know if this is a short-term fix to the active environment of a seller's market, or if GM is planning to make this a permanent change. Once production ramps up and markets normalize, a policy like this could backfire, especially among loyal GM buyers. It essentially traps buyers into a minimum year of ownership and ensures that third-party shoppers won't be buying these models as frequently from private parties. Frustration could even prompt prospective buyers to seek out different models from other automakers in protest.