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

Carguyshu

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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…

 

ClassaxV

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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...
 

Barstoolman1127

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Am pretty sure GM ran this by team of attorneys.
Besides, plenty of companies offer warranty’s to only the original purchaser. This has been going on for many decades.
Just because they ran it by a team of lawyers does not guarantee it will stand up court. Yes, its true, many companies do not allow for the transfer of a warranty however, this is a purely punitive move and and is not a good look as it is actively anti-consumer.

Who's to say that these vehicles will always appreciate in price during the first 12 months? This could greatly restrict the original owner's ability to sell his car and get from out from under it.

Ferrari restricts the ability of the original owner to sell their car during the first 12 months however, dealers are contractually obligated to sell the rare models for sticker. GM should be focusing on their greedy dealership network.........not their loyal customers!
 
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soulsea

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I don't have it in me to explain again why this is a money grab by GM and the dealers disguised as addressing the flipper issue, one that was never a problem when GM was able to make more cars. This is a supply driven issue, the solution is there, not by trying to infringe on the rights of the consumer.

Take this hypothetical ... most Chevy dealers are charging ADM on the Z06. So say someone specs a $145k car and pays the dealer $170k. That person decides they don't like the car, after all no one has even driven it yet, and wants out of it six months and a couple of thousand miles later. So he goes to market with that car and it's worth $160k with its warranty transferable ... still more than its original msrp but less than what he paid after ADM. That's not a flip for profit. That person is losing money and wants out of their car for the most money possible. By taking their ability to transfer their warranty GM further diminishes the value of their car, penalizing them although its not a flip. So now that customer has to decide whether to sell the car privately below market value because it is without warranty, or sell it back to the same unscrupulous dealer who charged ADM in the first place, but now with more leverage because he's the only one that can buy the car and save the warranty, effectively charging a second back ended ADM.

I am a free market person through and through. Different markets go up and go down. If I have to choose between a stranger making a few bucks because of a temporary supply issue and ceding my well established consumer rights to a corporation I will always chose the former.

Again, make more cars and the problem solves itself. Much higher demand brands like Porsche, who also struggle with supply issues, have a lot more common sense and don't try this nonsense, even with their rarest limited edition cars. The only brand I know that does this type of thing is Ferrari, where they won't allow you to sell your car to anyone but the dealer the first year, but Ferrari balances that out with forcing their dealers to sell at MSRP. Same with Ford and the GT orders, you had to qualify and sign a non sell agreement, and the dealer had to sell the car for sticker. That's a fair tradeoff ... you don't ADM me and I promise to hold the car, neither party can take advantage of the other ... but you can't have it free market on the side of the dealer and punish the customer.

IMO.

PS. As a passing note this policy won't change my Z06 order because I was planning to keep that car for a while, but it will likely make me cancel my Escalade V order. Like all my daily drivers I was planning to keep it for 6-9 months, put 10k or so miles on it, and sell it privately. Not a flip, it's just what I've always done no matter the market conditions and 99% of the time at great financial loss but without regret. I'm unlikely to put myself in a position where I have to choose to either sell my car privately at a discount or solicit a trade offer from a dealer with greater leverage on me.

Oh well.
 

malakas

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I don't have it in me to explain again why this is a money grab by GM and the dealers disguised as addressing the flipper issue, one that was never a problem when GM was able to make more cars. This is a supply driven issue, the solution is there, not by trying to infringe on the rights of the consumer.

Take this hypothetical ... most Chevy dealers are charging ADM on the Z06. So say someone specs a $145k car and pays the dealer $170k. That person decides they don't like the car, after all no one has even driven it yet, and wants out of it six months and a couple of thousand miles later. So he goes to market with that car and it's worth $160k with its warranty transferable ... still more than its original msrp but less than what he paid after ADM. That's not a flip for profit. That person is losing money and wants out of their car for the most money possible. By taking their ability to transfer their warranty GM further diminishes the value of their car, penalizing them although its not a flip. So now that customer has to decide whether to sell the car privately below market value because it is without warranty, or sell it back to the same unscrupulous dealer who charged ADM in the first place, but now with more leverage because he's the only one that can buy the car and save the warranty, effectively charging a second back ended ADM.

I am a free market person through and through. Different markets go up and go down. If I have to choose between a stranger making a few bucks because of a temporary supply issue and ceding my well established consumer rights to a corporation I will always chose the former.

Again, make more cars and the problem solves itself. Much higher demand brands like Porsche, who also struggle with supply issues, have a lot more common sense and don't try this nonsense, even with their rarest limited edition cars. The only brand I know that does this type of thing is Ferrari, where they won't allow you to sell your car to anyone but the dealer the first year, but Ferrari balances that out with forcing their dealers to sell at MSRP. Same with Ford and the GT orders, you had to qualify and sign a non sell agreement, and the dealer had to sell the car for sticker. That's a fair tradeoff ... you don't ADM me and I promise to hold the car, neither party can take advantage of the other ... but you can't have it free market on the side of the dealer and punish the customer.

IMO.

PS. As a passing note this policy won't change my Z06 order because I was planning to keep that car for a while, but it will likely make me cancel my Escalade V order. Like all my daily drivers I was planning to keep it for 6-9 months, put 10k or so miles on it, and sell it privately. Not a flip, it's just what I've always done no matter the market conditions and 99% of the time at great financial loss but without regret. I'm unlikely to put myself in a position where I have to choose to either sell my car privately at a discount or solicit a trade offer from a dealer with greater leverage on me.

Oh well.
I see your points but respectfully disagree. Not every car can or should be produced in unlimited numbers and supply chain considerations probably wouldn’t meaningfully impact volumes of these cars if addressed. There are fleet fuel economy considerations as well as general brand considerations to having a few halo cars. There is also free press to having some cars be limited future classics that the media rave about. If GM makes it painful to flip a car, then a larger percentage of the cars produced will go to people who intended to buy the cars for use or their personal collections. That means less competition at the dealers which kills two birds with one stone in fewer ADMs and more MSRP sales to end consumers. Seems like a good move to me. This will also severely impair the value of flipped cars taking that incentive out of the market. Were this a simple money grab, GM would not offer Z06 buyers the equivalent of $5000 of mygmrewards for keeping their cars a year. They have no need to put incentives on a zo6. To me this is a move to protect the brand by allowing enthusiasts a chance to actually buy the cars at the dealer without flippers front running them.
 
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soulsea

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I see your points but respectfully disagree. Not every car can or should be produced in unlimited numbers. There are fleet fuel economy considerations as well as general brand considerations to having a few halo cars. There is also free press to having some cars be limited future classics that the media race about. If GM makes it painful to flip a car, then a larger percentage of the cars produced will go to people who intended to buy the cars for use or their personal collections. That means less competition at the dealers which kills two birds with one stone in fewer ADMs and more MSRP sales to end consumers. Seems like a good move to me.

This isn't what's happening here. The Z06 has never been a limited edition or halo car. GM always prints them like there's no tomorrow. Historically they struggle to even stay at msrp till the end of first year of a gen, and within a couple of years they are thousands parked unsold in dealer lots discounted 8% under invoice. If they could they would do the same here. They just can't because like all manufacturers they are struggling to build cars, especially high performance ones. The whole thing is a knee jerk reaction to the supply issue.

However, if GM insists on doing something for its own sake, and because I don't like to complain without offering solutions, then I actually have a really simple solution to this ... it's not perfect, but it would minimize abuses on both sides of the transaction and make the process more equitable.

You ready for it? :)

The policy of the warranty not transferring with the car if sold in the first year only applies to customers who paid msrp or below.
Anyone who pays even a dollar over sticker can sell their car whenever they want without warranty implications.

There I fixed it.
 

malakas

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This isn't what's happening here. The Z06 has never been a limited edition or halo car. GM always prints them like there's no tomorrow. Historically they struggle to even stay at msrp till the end of first year of a gen, and within a couple of years they are thousands parked unsold in dealer lots discounted 8% under invoice. If they could they would do the same here. They just can't because like all manufacturers they are struggling to build cars, especially high performance ones. The whole thing is a knee jerk reaction to the supply issue.

However, if GM insists on doing something for its own sake, and because I don't like to complain without offering solutions, then I actually have a really simple solution to this ... it's not perfect, but it would minimize abuses on both sides of the transaction and make the process more equitable.

You ready for it? :)

The policy of the warranty not transferring with the car if sold in the first year only applies to customers who paid msrp or below.
Anyone who pays even a dollar over sticker can sell their car whenever they want without warranty implications.

There I fixed it.
Things printed like there’s no tomorrow don’t attract flippers.
 

jumpmanjay

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I see your points but respectfully disagree. Not every car can or should be produced in unlimited numbers and supply chain considerations probably wouldn’t meaningfully impact volumes of these cars if addressed. There are fleet fuel economy considerations as well as general brand considerations to having a few halo cars. There is also free press to having some cars be limited future classics that the media rave about. If GM makes it painful to flip a car, then a larger percentage of the cars produced will go to people who intended to buy the cars for use or their personal collections. That means less competition at the dealers which kills two birds with one stone in fewer ADMs and more MSRP sales to end consumers. Seems like a good move to me.
I'm sorry, but it's a stupid move. It does not hurt the flipper at all. They've made their money. It hurts the person who buys the car (above market, most likely) in the end who now has a car with no warranty. Will that drive the prices down? Maybe? Probably not much.

This is a seriously hypocritical move. GM are effectively saying only their dealerships are allowed to charge above MSRP. So they make this rule and who is affected? Dealerships? They still make their money. Flippers? They still make their money. GM? They now don't have to pay out of pocket for warranty repairs. The end buyer who actually wants to own the car for the long term? THEY are the ones that get screwed by this.

This is so stupid.
 

malakas

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I'm sorry, but it's a stupid move. It does not hurt the flipper at all. They've made their money. It hurts the person who buys the car (above market, most likely) in the end who now has a car with no warranty. Will that drive the prices down? Maybe? Probably not much.

This is a seriously hypocritical move. GM are effectively saying only their dealerships are allowed to charge above MSRP. So they make this rule and who is affected? Dealerships? They still make their money. Flippers? They still make their money. GM? They now don't have to pay out of pocket for warranty repairs. The end buyer who actually wants to own the car for the long term? THEY are the ones that get screwed by this.

This is so stupid.
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.
 

jumpmanjay

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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.
Have you seen what people are paying for 10 year old enthusiast cars?
 

malakas

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Have you seen what people are paying for 10 year old enthusiast cars?
Yes, but this is apples and oranges. Im a former Vagon owner a 10 year old car is sold without a warranty. Would you pay the same for a car currently sold new if one has a warranty and the other doesn’t?

Ford is actually looking at prohibiting sales of some cars in the first year like the lightning and did so with the GT. That seems a more draconian move than removing the warranty especially when GM will actually give you a further rewards incentive for holding a Z06 for a year.
 

jumpmanjay

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Yes, but this is apples and oranges. Im a former Vagon owner a 10 year old car is sold without a warranty. Would you pay the same for a car currently sold new if one has a warranty and the other doesn’t?

Ford is actually looking at prohibiting sales of some cars in the first year like the lightning and did so with the GT. That seems a more draconian move than removing the warranty especially when GM will actually give you a further rewards incentive for holding a Z06 for a year.
While I think Ford's moves with the GT (and likewise with Ferrari and their cars) are stupid as you own the car, not them, at least those penalize the person who is trying to flip it. Those make some logical sense even though I disagree with the authoritarian nature of it.
 

malakas

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While I think Ford's moves with the GT (and likewise with Ferrari and their cars) are stupid as you own the car, not them, at least those penalize the person who is trying to flip it. Those make some logical sense even though I disagree with the authoritarian nature of it.
Not sure I follow on why more restrictive measures are less bothersome to you. You could just keep your car for a year or not buy at all if your plan is to flip. I don’t think the manufacturer exists to make money for people interested in flipping cars. They are trying to build brand relationships.
 

soulsea

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You can't compare a volume manufacturer like GM to an exotics manufacturer like Ferrari.

The only thing that overlaps is the principle that it's either a market free for all or it's a managed environment.

Ferrari dealers HAVE to sell at MSRP (as did Ford dealers with the GT) no matter what the market value of the car is, and sometimes it's hundreds of thousands over what the customer pays for it, on the rare occasion millions. So if they don't let the dealers take advantage of the open market it's only fair that the customer can't either in the short term. But if like GM you're going to let dealers go to the open market value through their ADMs then don't come to your customers and punish them for doing the same thing.

Not to mention that GM has the arrogant presumption that they can predict the economy twelve months down the line. Aside from everything else, what happens if the market really crashes and we go into a recession? We're teetering 50/50 on that. So what? All the people that have to get out of their cars at way below what they paid for them also have to eat the discount because they can't transfer their warranty?

It's the most ill conceived idea ever. Most solutions have unforeseen and unwanted consequences ... here anyone can foresee them a mile away. The real world 'flipper' problem, as in people who specifically buy cars just to turn around and sell them is incredibly small, it doesn't run any way warrant taking out all the other customers this will affect. If the problem were significant GM would provide data to back their policy up. That's why it's clear to me that this is being done as a money grab with flippers as an excuse.
 
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soulsea

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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.

That's right ... we're taking it out if that ok with you? :)
 

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