With so many hot new vehicles inbound from the likes of GM – including models like the Chevrolet Corvette Z06, the Chevrolet Silverado EV, and the Cadillac Lyriq electric crossover – and such tight supply constraints, the time is ripe for price gouging abuses from dealers. It’s never quite been uncommon for dealers to try and profit off of high-demand new products by asking well over MSRP, but things seem to be especially bad of late.
General Motors is taking a proactive approach to stomping it out, sending a strongly worded letter to its network of US dealers that says, in so many words: we will come at you.
GM Dealers Warned Against Price Gouging
The letter was originally published by the Corvette Action Center, and it specifically calls out dealers who have “attempted to demand money above and beyond the reservation amounts set in GM’s program rules” on products with a manufacturer reservation system like the Silverado EV and Hummer EV. It also calls out dealers that have “requested customers to pay sums far in excess of MSRP in order to purchase or lease a vehicle.”
The punishment facing a dealer that runs afoul of GM’s wishes with regard to vehicle and reservation pricing could include redirecting their vehicle allocation or taking “other recourse prescribed by the Dealer Sales and Service Agreement.”
That’s awfully vague, and we have a hard time believing GM would go so far as to impose financial penalties or revoke a franchise, but it seems possible. Besides, the dealer body has just as many lawyers and powerful connections as GM does, if not more.
GM in its letter also calls out dealers who have worked with brokers – affiliated third parties who essentially “purchase” a vehicle or allocation and then resell it on behalf of the dealer to skirt price-gouging rules – which is a direct violation of the Dealer Sales and Service Agreement. The penalties implied for that behavior are the same as those prescribed for dealers engaging in other price-gouging practices.
C8 Corvette Z06 Expected To Have Price Markups
It’s only natural that the Chevrolet Corvette Z06 – which is set to launch this summer with pricing expected by springtime – would inspire such a letter; the American-born supercar is an absolute phenom, with a special racing-bred 5.5L flat-plane-crank V8 engine capable of up to 670 horsepower and 8,600 rpm. The response from fans was swift and enthusiastic, with waitlists at many dealerships stretching out to 3 or 4 years.
So, is this all bark, or will GM bite? The best reference we have is just about every trendy vehicle launch up to this point from GM, where the automaker just looked the other way when dealers added “market adjustments” to these products. Somebody eventually pays for it, too, validating the practice.
We don’t have to look very far to see how GM handled the C8 Corvette Stingray Launch which began in 2020.
“We’ve encouraged our dealers to sell the vehicle at sticker price, but at the end of the day they’re independent… we trust that they’ll do the right thing,” said General Motors Executive Vice President of the Americas Barry Engel to MC&T founder Manoli Katakis back in December of 2019, ahead of the 2020 Corvette launch in the coming months (and Covid). Engel has since been retired from General Motors, replaced by Steve Carlisle, who signed the recent stern letter to dealers.
How hard will GM push the dealers on this? How hard will dealers push back? We’ll have to wait and see.