GM to crack down on new car flipping

GENERAL MOTORS says it is being forced to implement punitive measures for speculators, some of whom are its own dealers, for ‘flipping’ new cars for excessive amounts.

Speculators, both private and from car dealerships, are reselling new, in-demand cars at huge mark ups in the United States, because of supply constraints or high demand means there is profits to be made from eager customers.

GM warned of its intent to penalise consumers and dealers who resell certain high-demand vehicles within 12 months. Interestingly, GM is asking dealers to help prevent “customers” from quickly flipping high-demand vehicles and adding exorbitant mark ups but many of the perpetrators are GM dealers.

According to reports from Automotive News and Road & Track, GM is barring customers who resell certain high-demand vehicles within 12 months from placing future reservations and orders. GM also is limiting the transfer of certain warranties.

Autonews reported that Steve Carlisle, president of GM North America, has outlined the change in a letter sent to dealers last Friday.

For now, GM considers the 2023 Cadillac Escalade-V, Chevrolet Corvette Z06 and GMC Hummer EV pickup and SUV “high demand” models that the requirement would affect.

“Industry-wide, dealers and consumers have been charging hefty prices for vehicles, dubbed ‘market adjustments’ by dealers, as inventory remains scarce. GM and other automakers have urged their dealership networks to sell and price vehicles fairly,” said the letter from Mr Carlisle.

“When vehicles are quickly resold, particularly by unauthorised dealers or other resellers that do not adhere to GM’s standards, the customer experience suffers, and GM’s brands are damaged.

“These changes are being implemented to ensure an exemplary customer experience, to ensure our brands remain strong, and to help prioritise ownership by brand enthusiasts and loyal customers.”

Dealers will receive a message from their respective brands this week detailing the warranty transfer limitations and customer acknowledgment requirements, the letter said.

Flipping cars has been a problem for GM for some time as only in January, Mr Carlisle sent dealers a letter encouraging fair sales practices after a small number had been demanding extra reservation fees, making unauthorised deals with brokers, and charging customers prices much higher than the sticker price.

According to Road & Track (R&T), some dealers are straight-up auctioning Corvette Z06 build slots.

GM will void your warranty if you try to flip your Z06, but it looks like that won't be enough to stop astronomical market pricing.

R&T reported on one Texas GM dealer auctioning off the allocation for the car rather than a Z06 itself.

Instead of waiting in line to pay market price, buyers are being asked to bid on the right to buy the next Z06 that the dealer gets. So, if that auction goes for $10,000 or $20,000, all that secures is the right to buy that Corvette. What it doesn't include is the Corvette.

Online reaction to this practice is furious, but actions to stop the flipping of desirable cars have been met with minimal success on the ‘free market’.

Locally, there have been similar accounts of the flipping of desirable models, both privately and from within car dealerships reselling new, in-demand cars at excessive mark ups.

The practice was red hot during the run up to the launch of Toyota’s new LandCruiser 300 Series affecting both the superseded 200 Series and new 300 Series models.

Some people made a lot of money out of the transactions with naïve buyers vying with each other for the right spec’ vehicle.

More recently, the LandCruiser 70 Series has been hit by speculators with some vehicles on offer for $50,000 more than the recommended retail price. A similar situation applies to the used and auction markets for these workhorses.

And it’s not only Toyota hit with flipper fever. Models including the Suzuki Jimny and new Nissan Z are likewise known to be in high demand, the Jimny selling for as much as $35,000 as stock shortages weigh on new buyers’ patience.