Beginning July 1, GM Financial may block lessees from selling leased cars to anyone but a GM dealership. Automotive News reports that the company “will stop working with non-General Motors dealerships on off-lease vehicle payoffs starting July 1 to ensure GM dealerships have ‘priority access’ to the vehicles coming back to market.”
The news comes as supply shortages rock both the new and used vehicle markets.
A worldwide shortage of microchips has slowed or paused the production of some popular vehicles. That leaves new car dealers with fewer cars to sell.
It also pushes some buyers into the used market. And the used car market is already full of buyers. Americans, some nervous about taking public transportation during a pandemic and beginning to trust in the economic recovery, are lining up to buy used cars.
But used car dealers are struggling to find enough vehicles to sell. In some cases, reports have shown dealers buying recent used vehicles for higher than their initial purchase price.
Used Car Values Soar
The average listing price for a used car, according to Cox Automotive, soared to $24,414 at the start of June. That surpassed the previous record of $22,568 at the beginning of May. Cox Automotive is the parent company of Kelley Blue Book.
A vehicle coming off its lease soon is a gold mine in that market. The price to buy a car out of its lease is set in the lease terms. That means that dealers can buy a car out of its lease for a price set in a buyers’ market several years ago, then sell it as a used vehicle in a seller’s market today.
GM’s move is not unusual. Automotive News notes that “many automakers have established off-lease policies that prioritize branded dealerships over competitors.”
Used car giants like Carvana and Vroom have made a practice of buying vehicles near the end of their lease terms. Under the new policy, lessees won’t be able to sell to them. They will, however, be able to sell to GM-branded dealerships.
Apparently, those who have already discussed a lease sale with another dealer have until next Thursday to complete their transaction.
