GM and Honda just made it harder to sell a leased car to another brand

General Motors and Honda have tightened the screw on lease returns to ensure their franchised dealers have an adequate supply of used cars to sell in a period marked by shortages and skyrocketing prices. Both firms made it significantly more difficult for someone leasing a car to return it to a dealership that represents another brand.

Industry trade journal Automotive News reported General Motors took the first step when it instructed its Financial arm to stop working with non-brand dealerships. Honda announced a similar policy several days later. In both cases, the new rules mean drivers currently leasing a General Motors or Honda car (including an Acura model) will not be allowed to sell it to any dealership that wants to buy it, regardless of whether it’s a rival company’s (Ford, for example) or a store that sells used cars (including a national firm like CarMax or a small mom-and-pop business).

Both companies cited the ongoing chip shortage as the main driver behind the decision. Production of cars, trucks, and parts fell by 6.6% in June 2021 due to the supply constraints, and the average price of a used car rose above $25,000 for the first time that month. That’s a $5,000 increase over June 2020 for a car with about 68,700 miles.

“[Our aim is] to better support our General Motors dealers through the current economic environment and the challenges they’re encountering sourcing quality pre-owned vehicles,” a spokesperson told Automotive News.

Demand for used cars has grown significantly in 2021, and the local Volkswagen dealer may pay more for an off-lease Civic than, say, the nearest Honda store. Buyers who want the extra cash aren’t completely out of options. One way around the new rules is to buy the car when the lease expires and sell it to the dealer offering more. It’s not impossible, but it’s more of a hassle than simply trading it in; it requires a significant investment as well.

General Motors will enforce this rule through the end of 2021. Honda will reassess its policy at the end of the year. Prioritizing brand-affiliated dealers could give smaller stores that don’t represent a major carmaker a big punch in the gut, but it’s not new or unusual: Ford told Automotive News it hasn’t accepted thirty-party lease returns for years.

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Katherine E. Ackerman

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