GM cancelling warranty on z06, hummer, Escalade-V if flipped

[Tall Steve]

@1StunnaV

 

[ClassaxV]

These are $100k+ cars. This 'impacts' the most fortunate of the 1%, it' not remotely touching the entire economy. How many 5BWs, Z06s, Esc Vs are being flipped? No way to tell; pick your most alarmist % from production numbers and it's still tiny in the grand scheme of things: it's a storm in a teacup.

You know what impacts the economy to a greater degree? Manufacuturers doing nothing to rein in their greedy and predatory dealers to throw 10%+ ADMs on bog standard $30k cars.

With all due respect, saying it only impacts a small percentage of people is not a defense to the allegation that it's an unhealthy practice.

If it were not an issue GM would not be trying to get out ahead of it. As far as I am concerned, and I'm not a dealer but instead a hard working consumer, any steps they take to discourage youtubers and flippers from clogging the demand only to put overpriced cars into the market is fine with me. I've owned performance cars before and I know for a fact that investment and media buyers treat them like rental cars and I wouldn't ever buy a used performance vehicle that was used as part of rental fleet. Especially when said car is being offered at above msrp next to brand new production vehicles.

 

[malakas]

What's bad is the dealership network charging outrageous ADMs for vehicles. Again, all GM has to do is not allot cars to dealerships that charge ADMs.........

Its simply a silly and misguided step.....rather than trying to rein in their greedy dealership network from trying to charge ridiculous ADMS, they're focusing on their customers. For you to fall into their thinking, is kind of hard to believe. Flippers have little, if any, impact on our economy. Dealers charging 20%-100% markups, do!!!

I agree dealers should be reined in via allocations. However fixing the dealer piece alone doesn’t solve the issue. You need to do that and eliminate the flippers who are acting as a second middle man in the market. I view the flipper as front running the end buyers as they aren’t buying the car to actually keep it, they are just making end buyers pay more. I do hope GM does blackball that buyer set from being able purchase limited production cars in the future.

 

[soulsea]

Water always finds its level. Patek makes their warranties non transferrable and it doesn't stop some of their watches going for five time their msrp five minutes after purchase. When the problem is driven by low supply the market will find a way to reflect it. From a consumer point of view there's zero practical difference if they pay a flipper $30k over or a dealer $30k over, the money is out of their account, payee is irrelevant to their balance.

The flipper problem, as in people who buy high demand cars, barely drive them, and sell them within a month is a lot smaller than people think. Most of the time in the last couple of years some cars have held value and are selling over msrp even after they've been driven for a year and say 10k miles. That's not a flip, that's just random market draw to a person who bought a car and used it. That person like all of us has historically lost a bunch of money on all their cars, good for them to happens until this little short period where they get to keep more of their money. It's inaccurate to mix that in with the flippers, but most people do because it's the laziest way to find someone to blame.

Even the title of these threads across all GM forums is misleading. It should be 'GM makes warranty non-transferrable for these models if sold for the first year.' That way it's clear that this affects everyone who might want to do so, including flippers. There are numerous reasons someone may choose to sell their car the first year, flipping is just one of them, yet GM is penalizing the majority to address a small minority.

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I honestly think a lot of this is because this flipper dynamic is very new to the Corvette community and GM in general. It's the byproduct of a historical market outlier and distortion borne of the pandemic. I remember when the C7Z came out, there was meat on the flip bone for a few months and then all that went away very quickly, Bowling Green was printing cars, and with two years there we're thousands on dealer lots being discounted 8% under invoice.

This stuff is all baked into the ecosystems of brands like Porsche, McLaren (although their cars were also depreciation bombs), Ferrari, and other supercar and exotic car makers. Those companies and their customers although frustrated by the limited supply weigh that against the exclusivity and desirability of the products, and flippers are just a natural byproduct, an annoyance but one that barely registers and is mostly shrugged away.

Corvettes were always the accessible 'supercar' ... both financially and practically. Both of those things are going away, first with the current pricing and because of the limited supply due to well known issues. This is all unfamiliar and undesired territory for Corvette and other GM vehicle prospective owners and fans and it's super easy to try and find someone to blame, and the flipper is the easiest target. It's just not the actual source of the problem, just a small symptom.

That's why other high end car companies do not have such a warranty policy, this is a knee jerk ill conceived move from a company that has never experienced this before.

 

[1StunnaV]

GM is saying they’re going to cancel warranties on these 3 cars if they are resold within first 12 months. They should probably add the 5-BW on there too…

GM Will Cancel Your Warranty If You Buy Your Z06 From A Flipper (Update) - Jalopnik

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...

jalopnik.com

I will believe it when I see it....

That’s not going to end well for GM in court

My thoughts exactly...

A poor choice of wording, GM has every right to only extend warranty to the original owner, there is no requirement that a warranty be transferable.

Canceling makes it seem like an active punitive step, when in fact it merely a passive step to not extend a privilege.

It may also inadvertently cut into the interim purchases people are making as they wait on their orders.

I guess no good deed can go unpunished...

I am no lawyer and I am not saying I'm 100% correct but I believe this is incorrect. My understanding is that the United States federal law dictates that the warranty is associated with the car and transfers to successive owners until the warranty’s expiration.

To be clear, those "extended warranties" you purchase are not included within this because legally, they are not warranties. They are usually referred to as VSA's or "Vehicle Service Contracts." Its illegal to call them extended warranties, even though everyone does...

Who will buy the flipper’s car without a warranty? Sounds like flip gone flop. Take that demand out and the enthusiast gets cars easier from the dealer. After the insanity I went through to get an allocation for a BW5, nearly writing off gm as a brand, I don’t see why that is stupid.

Thats the goal.... they are trying to scare people from buying flipped cars.... and I believe it will work....

Pretty simple, if you don’t like the selling terms laid out by GM then don’t buy the car.
We can’t all be entitled to everything we want.

well said....

 

[1StunnaV]

The only way I could see this playing out is if the Escalade V doesn't actually come with a factory warranty and a VSA or "vehicle service agreement" is added as a line item..... or given to the original owner at no charge or very little charge.... that would in fact hold up...


On the flip side, I have multiple customers that buy so many cars and don't keep them but maybe six months... they aren't flipping them, they just love cars and can afford to constantly change.... These customers have been buying from me since well before this shortage....... This could be a problem.......

 

[tcolum]

The only way I could see this playing out is if the Escalade V doesn't actually come with a factory warranty and a VSA or "vehicle service agreement" is added as a line item..... or given to the original owner at no charge or very little charge.... that would in fact hold up...


On the flip side, I have multiple customers that buy so many cars and done keep them but maybe six months... they aren't flipping them, they just love cars and can afford to constantly change.... These customers have been buying from me since well before this shortage....... This could be a problem.......

On the flip side...I see what you did there.

 

[soulsea]

On the flip side, I have multiple customers that buy so many cars and done keep them but maybe six months... they aren't flipping them, they just love cars and can afford to constantly change.... These customers have been buying from me since well before this shortage....... This could be a problem.......

This is exactly my situation. I’m probably going to have to pass on the Escalade V because of it. And if GM forces me into this my current Blackwing is likely to be my last purchase from them. It’s no way to treat a long standing customer, or even a new customer that may need to sell his vehicle for valid reasons.

 

[Tall Steve]

The only way I could see this playing out is if the Escalade V doesn't actually come with a factory warranty and a VSA or "vehicle service agreement" is added as a line item..... or given to the original owner at no charge or very little charge.... that would in fact hold up...


On the flip side, I have multiple customers that buy so many cars and done keep them but maybe six months... they aren't flipping them, they just love cars and can afford to constantly change.... These customers have been buying from me since well before this shortage....... This could be a problem.......

Let me go on the record and say I like my two BW's and will not be purchasing another one from you anytime soon......LOL, now, my wife does have her eye on a new XT4 when all the supply chain crap gets worked out...... I'm bringing my 5 in for service on Friday so if your there come say hi in the waiting room......

 

[1StunnaV]

Let me go on the record and say I like my two BW's and will not be purchasing another one from you anytime soon......LOL, now, my wife does have her eye on a new XT4 when all the supply chain crap gets worked out...... I'm bringing my 5 in for service on Friday so if your there come say hi in the waiting room......

we have like 75+ XT4's in stock last I checked....

 

[tcolum]

This is exactly my situation. I’m probably going to have to pass on the Escalade V because of it. And if GM forces me into this my current Blackwing is likely to be my last purchase from them. It’s no way to treat a long standing customer, or even a new customer that may need to sell his vehicle for valid reasons.

And there are a lot more people that do the above than there are flippers. A lot more.

 

[ClassaxV]

A trade in is a different situation than a flip. People generally have more than a thousand or 4k on a vehicles driven in a year, there are "used" 4s and 5s with under 500 miles on the clock at well over msrp, at least 34 based on a quick scan of the inter webs.

Look at the auctions the average mileage for a used 2022 5BW is only 832 and they are all above msrp. The 4s are even worse, 27 of them and average mileage is only 571miles, all over msrp, yet we can't get orders, can't get allocations can't get carbon fiber can't get manuals yet it would seem on a vehicles where it appears GM made less than 2000 of each, over 300 5s and close to 450 4s are already for sale used or on their second owners before the 1000 mile mark.

People must really hate these cars to turn them over that fast in such numbers. Yet there they sit, reserves not met, or dealer lots.

I could go right now and have my pick of two 4s (automatics) and one manual in my spec all used less than 800 miles, all at least $8k above msrp or again if I wanted an automatic I could pay $11k over msrp and pick one of three new ones. Instead I'm waiting and will pay msrp. Not because I don't want the car now, there's a principle involved here. Moat of us who are waiting probably could have had the cars we wanted had 25% of the folks who bought ahead of us in the que actually didn't just buy to take a 1000 mile joy ride, assuming they actually meant to keep the cars ( less than 1k tells me most of them didn't)

Look at the numbers on the C8 and it really paints the picture. Almost 37% of the cars produced were either for sale as used or on the second owner with less than 1k miles. 34% of the total c8 production since 2020 has been up for auction. Average mileage 649 miles.

Those figures don't suggest the majority people are just swapping cars every six months. That or people don't drive much. I'll put close to 50 miles on mine just getting home from the dealer....

But hey, cars are a commodity and like all commodities the only way to extract profit from the system without actually being a value adder is to buy low on the speculations that prices will rise. It works especially well if one's volume of purchases can actually influences the market.

 

[ClassaxV]

No disrespect intended here, but dealers do not sell a car that still has a balance of the manufacturer warranty available "as is". A Cadillac, or any other GM dealer, does not take in a car with 10,000 miles on it, and forsake the manufacturers warranty. They use the remaining warranty as a value add to increase the value and appeal of the vehicle. If we are having a debate, let's use realistic examples. I have bought and owned about 23 GM vehicles in the last 25 years, most used, all bought at a dealership for this exact reason. So in this case, I would dare say I know what I am talking about. And no, I am not talking about an extended warranty. I have never bought an extended warranty on any car. I am not even debating the practice GM is thinking about, as they will not be able to enforce it anyway. Imagine a dealership going through the questions trying to figure out where you bought the car, and how much you paid for it, and how old was it, etc. And why is it 12 months, and not the balance of the original warranty? I buy it used at 366 days and I am automatically the good guy, and I get a warranty? What if I still paid $25K over? Suppose this diabolical group of 40 or 50 flippers decides that 366 days is part of their business model. If you think the dealer is going to go through that and potentially alienate (more) customers, good luck. To me, the real issue is GM making yet another huge blunder by trying to control a vehicle that is no longer theirs. As I stated before, they do not seem to mind when you buy a new vehicle, and 3 years later offer you 1/2 or less of purchase price as trade in value. Why aren't they protecting the consumer from the great injustices in those cases? The entire concept is as unenforceable as it is ridiculous.

I think you are making their point. The remaining warranty is a value proposition. They aren't required to provide a warranty and as such can determine the terms of any warranty between themselves and the buyer. They can offer none or a 6-year or 100K mile unlimitted bumper to-bumper or a 3 year 60K mile limited powertrain only or combination or ect... They CAN contractually limit it to the original owner if they wish.

Everyone keeps coming up with outlying scenarios on a plan that will never be able to address every individual set of circumstances. It's designed to discourage one specific scenario; non-licensed dealers from purchasing specific limited production cars for the purpose of flipping them within a year of purchase. The intended goal is to reduce the profitability of doing so, which will reduce the number of people willing to engage in that behavior which in turn, reduces demand which in turn reduces the temptation for dealers to ignore the MSRP bringing prices down for the consumers. In the C8 Z06 world I read about a guy who has orders in with five dealers and is hoping to get at least 3 cars, one for himself and to sell the other two. He's not a car dealer he's just some smuck looking to capitalize on the initial release and screw two other buyers and the dealer he bought them from to make a buck. At least this way, he may have to think twice and or possibly wait a year to do it. I find it hard to believe he is the only one.

We tend to equate what has been done in the past or being done now with what CAN be done in the future. In a traditional market, it makes perfect sense for GM, just to remain competitive. to provide an excellent warranty program and extend it to the life of the vehicle no matter how many owners. However, this isn't the traditional market and these are not their run-of-the-mill grocery getter offerings so.... yes non-traditional steps may have to be taken. I absolutely agree with everyone who is also saying they need to do something to hold dealers more accountable on the ADM's but by the same token I don't see anyone yelling with the same vigor when dealers have to sell below MSRP either.

No policy can be perfect to everyone, at best we can only hope for a policy that is consistent for everyone.

 

[Barstoolman1127]

For some strange reason, you have no problem with dealers gouging their customers with exorbitant ADMs yet have a problem with that same customer either flipping, trading in or getting out from under a vehicle one purchased with the first 12 months. Your way of saying all that's okay is by wanting the manufacturer to put a restrictive clause in the purchase contract to punish the customer.

Again, the problem of flipping is so small compared to dealers charging ADMs on virtually all vehicles today....taking advantage of so-called supply chain shortages, the War in Ukraine and a million other excuses.

 

[RDATLTE]

It is absolutely a punitive step against any consumer who decides to purchase a nearly new car on this list and for any seller who for whatever reason (some good, some 'bad') needs to sell inside the window.

It beggars belief how anyone (not you specifically, speaking generally) thinks this is a good thing for consumers.

It's like thinking subscription fees for options is a good thing.

Somewhat related, mandatory OnStar! Can you say deal breaker?!

https://gmauthority.com/blog/2022/07/buick-and-gmc-models-get-mandatory-3-year-onstar-and-connected-services-plan/

 

[ClassaxV]

For some strange reason, you have no problem with dealers gouging their customers with exorbitant ADMs yet have a problem with that same customer either flipping, trading in or getting out from under a vehicle one purchased with the first 12 months. Your way of saying all that's okay is by wanting the manufacturer to put a restrictive clause in the purchase contract to punish the customer.

Again, the problem of flipping is so small compared to dealers charging ADMs on virtually all vehicles today....taking advantage of so-called supply chain shortages, the War in Ukraine and a million other excuses.

I think I said just the opposite, Dealers should NOT be gouging customers and the ridiculous ADM's they feel they need to charge are not in keeping with their franchise agreements. I'm not a dealer but I know they get assessed penalties for not following their agreements and for some the current inflated market and ability to charge ADMs makes it worth the risk.

I'm a Global Sourcing Contract Lead for a fortune 100 and like you, Im so tired of the word shortage as an excuse to raise prices for the long term even though the DELAY was short-term. I agree there are some terrible unscrupulous dealers out there. I deal with them by NOT giving them my money and shopping with franchises that actually follow the rules no matter how long I have to wait for my car.

The proposed clause doesn't punish the customer at all, it could reduce the pool of potential second-hand buyers in the first 12 months of ownership to those who don't care about a warranty. How do you stop inflation? Increase supply or decrease demand. GM appears to be attempting to do both.

The language will discourage some buyers of these specific models from purchasing new because they may not be able to turn them over in private sale as quickly... = reduced demand, and or less willingness to pay over MSRP
It will discourage some buyers from buying used in the first 12 months due to warranty fears = less demand and or less willingness to pay higher prices.
Some buyers will be incensed and not buy them out of principal = Less demand and greater supply
With less demand, some dealers won't be able to charge ADM and move the cars as quickly = more supply and lower prices. Those are all wins for GM's core consumers who I suspect don't actually fall in the buy a new car every 6 months for fun tax bracket. Remember there is a whole factory dealer direct lease market competing with the demand for sales of these vehicles as well.

There are those who will do what they want when they want anyway, "Locks and laws only keep honest people honest, they are completely ignored by criminals. " But to be clear I'm pro-capitalism, pro-fair market values and anti-gouging by dealers or anyone else. The markets do need practical and ethical regulations though. The markets should serve the people, not the people served up to the markets.

 

[M2Cto4BW]

Somewhat related, mandatory OnStar! Can you say deal breaker?!

https://gmauthority.com/blog/2022/07/buick-and-gmc-models-get-mandatory-3-year-onstar-and-connected-services-plan/

Nothing says we have a successful subscription-based product here, like rolling 3 years worth of it into a mandatory single line item purchase.

Fortunately I own the thing GM sells that I am interested in, but if I was cross shopping a pickup or SUV, absolutely they'd get an automatic pass.

 

[soulsea]

Withdrawing both my Z06 and Escalade V orders, will not order another Blackwing or the Silverado EV I reserved.

My current Blackwing will be my last GM product.

 

[ClassaxV]

Withdrawing both my Z06 and Escalade V orders, will not order another Blackwing or the Silverado EV I reserved.

My current Blackwing will be my last GM product.

Wow really sorry to hear that, but I really don't get what is so offensive, unless the actual plan is to order everything and then sell it within a year, but hey demand for all of the above falls by one unit each, so their plan appears to be working.

 

[soulsea]

Wow really sorry to hear that, but I really don't get what is so offensive, unless the actual plan is to order everything and then sell it within a year, but hey demand for all of the above falls by one unit each, so their plan appears to be working.

2009 Tahoe Hybrid
2010 Yukon Denali
2011 Escalade
2012 Escalade
2015 Z/28
2015 Corvette Z06
2016 Corvette Z06 (Callaway)
2015 Z/28 (2nd one cause I missed my first one)
2022 CT5V Blackwing

2023 Escalade V (status 3400)
2023 Z06 (status 1100)
2023 CT5V Blackwing (was waiting for matte black color availability to order)
2024 Silverado EV (reserved)

That is my GM purchase and order history over the last decade or so. I note it not as a flex but just to convey that I have been a good customer to the brand, nothing special and there are many others who dwarf my purchase history (many who like this policy). I also note it to make the following point ...

All the above cars were sold within a year of purchase, none of them for profit ... in fact all of them lost tens of thousands of dollars in the transaction, not to mention the sales tax hits on top of that. There was no complaint from me, I enjoyed the cars and understood the price of admission for my vehicular addiction, it is my primary passion in life, I am an enthusiast to the core both on the street and on track, who is blessed to be able to afford this habit.

I will now have to do it purchasing cars from other brands that do not restrict or penalize me for doing with my possessions as I wish after I have paid for them with my money. This whilst I do not see a similar form asking dealers to agree that they will not sell these cars over MSRP. It isn't just wrong, it is insulting.

My plan was to keep the Z06 for more than a year, and despite that I am withdrawing my order anyway. My Escalade V was likely to be driven for 10k or so miles and be sold with a year, obviously not a flip as it was going to be my daily driver, so that purchase would directly be impacted by this policy. I was already reconsidering my purchase of that vehicle as GM decided to price it at $150k whilst constraining supercruise on what is Caddy's halo model, and also constrained my color choice ... this just makes that decision easier. Like I said I will also not be ordering the second CT5 V Blackwing that I was getting to replace my current one not the upcoming Silverado EV.

I enjoyed my GM vehicles a great deal, my current CT5V Blackwing is one of the best and most fun cars I've ever driven. As a long time 458 Spider owner, I know how magical these engines can be and I was really looking forward to the Z06, as I was to the Escalade V ... but I am cursed with this principles thing that's going to make me miss out on them, and I deeply resent GM for forcing me in this situation that I have to make these choices, but in the end I didn't work my ass off all my life to be restricted in my use of a product I purchase with the fruits of that labor, by a freaking car company no less.

This will undoubtedly make other customers very happy to take my spots for all these highly desired vehicles. That doesn't bother me one bit ... that's because I am indifferent as to what other people do with their money and purchases. I don't care if a stranger flips their car just like I don't care if a stranger gets my spot, those are other peoples lives and I wish everyone the best. My responsibility is to myself, my mirror, and my ethics, and I refuse to give a penny of my money to a company that penalizes my loyalty and continuing business in such a fashion.

GM will sell out the Z06 and will sell out the Escalade V. Those are not the only cars they sell, and this supply chain distortion will not last forever. I am not the only one with a long memory.

Anyway, congratulations to GM, they took me and many other of their best customers out of their brands with this policy (yes, we talk to each other), I hope it was was worth it in this poorly thought out attempt to take out a tiny subset of people who flip cars that only exist because they can't produce enough cars and will organically fade away when they gradually go back to their historical production numbers.

I wish GM and everyone the best ... but I'm done with that company with no path back to it no matter what they do, say, or build moving forward.

The whole thing is so infuriatingly stupid.
Thankfully there are plenty of car choices out there ... I'm pretty sure I'll be fine.